6 Penny Stocks to Buy for the Biotech Boom

These stocks offer low price but not extraordinary risk

By Louis Navellier, Editor, Growth Investor


There is a boom in biotech stock picks right now, thanks to innovative technologies and cutting edge treatments that allow small companies to tap into big revenue with just a single pill and FDA approval. Biotech stocks can bleed money for a short period of time, but with just one successful trial these unprofitable penny stocks can see soaring share price and buyout offers from big pharma.

And most importantly, deliver big gains to stock owners.

Of course, there is big risk in biotech investing too. If a company doesn’t have a proven track record or good management and research staff, a penny stock in this sector can collapse and leave you with nothing.

That’s why I apply some high standards to cheap biotech stocks — they must be listed on a major exchange like the NASDAQ, NYSE or AMEX, they must have a proven track record of earnings or sales success, and they have to have quantitative buying pressure backing them up.

Here are six such biotech stocks that make the grade, and could be breakout buys for investors:

Rexahn Pharmaceuticals (RNN)

Clinical stage pharmaceutical company Rexahn Pharmaceuticals (AMEX: RNN) is developing and seeking to deliver cures for cancer and disorders of the central nervous system. Over the past 12 months, this penny stock has soared an impressive +123%, compared to a gain of +18% for the Dow Jones in the same time frame. The stock has shown growth potential as of late too, and is up +32% over the past three months.

AEterna Zentaris Inc. (AEZS)

AEterna Zentaris Inc. (NASDAQ: AEZS) is a drug development company that focuses mainly on oncology and endocrine therapy. Over the past year, stockholders have watched this penny stock jump +88%. The stock came back to Earth after massive gains in May, but has since gained +27% in the last three months. If you catch this stock at the right time, you can add some serious cash to your portfolio buy buying after this dip. It is also important to note that AEZS is not trading very far from its 52-week high of $2.19 so momentum is on its side.

Zalicus Inc. (ZLCS)

Next on the list is biopharmaceutical company Zalicus Inc. (NASDAQ: ZLCS) which is known by many as CombinatoRx. Zalicus develops drugs that focus on the treatment of pain and inflammation. Over the past three months, ZLCS stock has performed quite well and is up +54%. More recently, this penny stock is up +25% in the last month. My friend Michael Murphy, a well-respected tech and biotech investor, has picked Zalicus as his best stock for 2011 out of all the investments on Wall Street! You’d be wise to follow his lead and pick up this biotech gem.

Inhibitex Inc. (INHX)

Inhibitex Inc. (NASDAQ: INHX) is a biopharmaceutical company that develops anti-infective products, used to prevent and treat several infections. Over the past 12 months, INHX stock is up +115%, compared to much smaller gains by the broader markets. INHX has also been impressive in the short term, and is up +15% in the last 90 days. Another good sign for potential buyers came in December when one of Inhitex’s trial-phase products used to treat shingles was determined to have positive results.

YM BioSciences Inc. (YMI)

YM BioSciences Inc. (AMEX: YMI) develops products used in the treatment of cancer patients. In the past three months, YMI stock has gained +22%. In the long term, this biopharmaceutical stock has jumped +56% in the last year.  Importantly, YMI is currently trading near its 52-week high of $2.75, and could possible set a new high in the coming weeks as momentum continues to build. Because of its long-term and short-term success, consider adding YMI stock to your portfolio.

Dynavax Technologies (DVAX)

Rounding out the list of top pharmaceutical penny stocks to buy is Dynavax Technologies (NASDAQ: DVAX). Dynavax develops products to treat and prevent infectious diseases, asthma, inflammatory and autoimmune diseases. In the last 12 months, this penny stock has gained +106%. Stockholders are also pleased by the fact that DVAX stock has climbed +65% in the last three months as well.

As of this writing, Louis Navellier did not own a position in any of the stocks named here.

Article printed from InvestorPlace Media, https://investorplace.com/2011/02/penny-biotech-stocks-to-buy-rnn-aezs-zlcs-inhx-ymi-dvax/.

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