The market can be remarkably frustrating at times.
It can also be quite rewarding…
While the rest of the market is enjoying a healthy start to the fall, biopharma stocks continue to lag.
The fact that stocks in the space are still under pressure in a rising market means it’s time to buy.
Make no mistake: biotech will rise again.
Here are five biotech stocks to buy immediately.
That’s all well and good, but for those willing to buy beaten-down stocks—and I mean really beaten-down, to the tune of 50% or more—monster gains have followed.
Case in point: Shares of Freeport-McMoRan (FCX) are up nearly 50% since September 29.
Not bad in just a little over a week of action. And more gains are likely, as the stock is still down nearly 50% for the year.
The fire sale in the commodity space was easy to see. Selling had reached ridiculous levels.
The same thing is now taking place in the biopharma space.
Let’s dive in. There’s no time to waste…
The superficial short story of looming regulatory pressure on drug prices has destroyed what had been one of the best-performing segments of the market.
The fact that stocks in the space are still under pressure in a rising market suggests that we have reached the Looney Tunes stage of the selling.
Looney Tunes is code for irrational… and when we see irrational, the time to buy is now.
What stocks should you buy?
Consider these five ASAP…
Buy These On-Sale Biopharma Stocks NOW: JAZZ (JAZZ)
Shares of $8 billion drug company Jazz Pharmaceuticals (JAZZ) have fallen some 40% since reaching a peak in early August.
Unlike many speculative biopharma stocks, Jazz shares were still cheap at $200 per share.
What are they at $132 per share today?
Can you say ridiculous?
Jazz is on pace to make $9.67 per share. That means you are buying the stock today for only 13.6 times current year estimated earnings.
Considering the company will grow profits by more than 20% in 2016 according to analysts, now is the time to buy this seriously cheap biopharma stock.
Buy These On-Sale Biopharma Stocks NOW: AMAG (AMAG)
It seemed like AMAG Pharmaceuticals (AMAG) shares were cheap in the low $60’s…
Sliced nearly in half from those levels, the stock is primed for a huge reversal rally.
All you need to know here are the fundamentals.
AMAG is expected to grow profits by 47% from the current year to the next.
You can buy that massive profit growth for only 8 times 2015 estimated earnings.
In almost every single instance of such a value disparity, the gains that followed have been similarly ridiculous.
Buy AMAG before this rocket ship takes off.
Buy These On-Sale Biopharma Stocks NOW: Mallinckrodt (MNK)
A 50% gain in shares of Mallinkrodt (MNK) is virtually guaranteed for buyers at current levels.
Shares of this generic drug maker were absolutely crushed during the biopharma sell-off, losing more than 50% of their value.
On what basis?
If the issue relates to pricing of drugs, one would think generic drug makers like Mallinckrodt would be minimally impacted by whatever scary future is being conjured by the shorts.
No matter, the market is throwing out the baby with the bathwater.
Seriously… a virtually guaranteed winner?
Yes, thanks to the company’s own updated guidance for 2016.
That guidance takes away the mystery and any uncertainty about valuation.
Mallinckrodt expects earnings of $7.70 to $8.20 per share in the current fiscal year ending September 30, 2016.
The top end of that range puts profit grown at double digits.
With shares trading for only nine times prior fiscal year estimated earnings, Mallinckrodt is a fire sale stock to buy now.
Buy These On-Sale Biopharma Stocks NOW: Akorn (AKRX)
Peak to trough, Akorn (AKRX) shares, like their biopharma brethren, sunk more than 50%.
You can’t tell me these stocks are suddenly—in only a month or two of trading—worth half what they were worth previously.
It makes no sense.
Akorn shares are super-cheap relative to expected profit growth in the near term.
Analysts expect the company to grow profits by more than 20% in 2016. At current prices, shares trade for 15 times 2015 estimated earnings.
There really is nothing more that needs to be said.
Buy the stock at such a deep discount to value.
Buy These On-Sale Biopharma Stocks NOW: Pacira (PCRX)
Pacira Pharmaceuticals (PCRX) is the ultimate blood-in-the-street stock.
Earlier this year, the stock was trading for over $120 per share.
Even before the short attack on the drug sector, Pacira began a nosedive that didn’t end until the stock was in the mid $30’s.
How does that make any sense when Pacira is expected to grow profits by nearly 75% in 2016?
It makes no sense—and is exactly why you should buy shares.
At current prices, Pacira is a bit more expensive than the stocks listed above, with shares trading for almost 50 times 2015 estimated earnings.
Wall Street firm Wedbush believes Pacira is worth over $100 per share.
That would be more than 100% more than current prices.
Once the fantasy of regulated drug pricing dissipates, all of these stocks, including Pacira will likely soar.
Don’t delay on these moves. NOW is the time to buy!
This post originally appeared in mainstreetinvestor.com.
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