#1: BioDelivery Sciences
YTD Performance: +670%
Have you gotten the memo about biotech stocks yet? The highest flier in the entire Russell 2000 is BioDelivery Sciences (NASDAQ:BDSI), a specialty pharmaceutical company that is focused on — you guessed it — cancer. Other areas BDSI is pursuing treatments in include pain therapy.
But rather than dive into this stock — shocker, favorable clinical results drove the rise and the company has finally started making money instead of bleeding cash — I want to offer a cautionary tale before you go racing for this top pick.
Consider that while huge gains are possible, the losses in biotechs are equally painful.
It’s great when you catch lightning in a bottle with a development-stage biotech that figures it all out. But be aware that the flip side is a distinct possibility, and that this sector is perhaps the most volatile on Wall Street because one FDA report literally can make or break a company.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing he did not own a position in any of the stocks named here.