Biotech is climbing in 2020 — how Matt McCall is playing it, as well as which specific stock Eric Fry likes as we search for a COVID-19 vaccine
All eyes are on drug companies’ efforts to find a vaccine for COVID-19.
And from the looks of it, we’re making major progress.
But in the shadow of this massive, collective push from the global scientific community, there are many other wonderful advancements being made today in biotechnology.
For example, we’re seeing advancements in …
Biosensors — these sensors are calibrated and designed to track personal biosignatures, such as blood pressure, pulse, breathing, and body temperature. They are revolutionizing how we monitor our health.
3-D Bioprinting — you’ve heard of 3-D printing in the industrial sector, but now scientists are working on using living cells to create various human body parts such as heart valves, skin, and cartilage.
Gene editing — today, sequencing your genome is almost downright cheap. Genetic engineering holds the key to helping treat millions of people afflicted with hereditary diseases.
Virtual and augmented reality — this isn’t just for gaming. It enables doctors to examine 3-D representations of the human body and its various parts. This allows for better diagnosis, and operating efficacy.
This is just the beginning …
In terms of actual pharmaceuticals, we’re seeing progress made on treatments ranging from cancer, to rheumatoid arthritis, to cystic fibrosis, and far more.
In short, we’re entering a golden age of biotechnical advancements.
***Regular readers of Matt McCall are already aware of this … and have been cashing in
For newer Digest readers, Matt is our resident thematic expert. He finds the massive trends that are reshaping our world, and by extension, our investment markets. He then identifies the specific stocks best positioned to ride those trends higher.
And one of the trends he’s most excited about is advancements in biotech. It was back at the turn of the year that Matt made a bold prediction:
I believe 2020 will be the Year of Biotech.
I look for the biotech indexes to return more than 20% … while the best, most innovative biotechnology firms will rise more than 100%.
The future of healthcare will really start to take shape this year, and the next decade will bring advancements that we can only imagine in our wildest dreams … from a possible cure for cancer to artificial intelligence drug discovery to devices that will track our vitals 24/7.
As I write, Matt’s Early Stage Investor portfolio holds six biotech/healthcare recommendations that are up double-digits, and four such triple-digit recommendations.
You can see biotech’s strength by looking at VanEck Vectors Biotech ETF (BBH). Since the beginning of the year, while the S&P is down 9%, BBH is up 12%.
***But U.S. biotechs aren’t the only game in town, and Matt has a different country’s biotech sector in his crosshairs as well
From Matt:
China’s healthcare and biotech stocks have been standouts in the recent global bear market.
The government is devoting massive resources to growing China’s biotech industry, and big winners are already emerging …
I continue to believe the opportunity in U.S. biotech stocks is one of a kind. But … so is the opportunity in biotech and healthcare stocks in China. It would be crazy to look past it.
At the moment, this is an opportunity with short-term relative strength — which is great in a down market — and huge long-term potential.
The chart below shows the year-to-date performance of two China biotech stocks that trade in the U.S., two healthcare-related China ETFs, and the S&P 500. Of the five, the only loser is the S&P 500 (-11%).
Both ETFs are up on the year, and the two stocks — Zai Lab (ZLAB) and WuXi Biologics (2269.HK) — are crushing the market.
Chinese biotechs are doing so well because the Chinese government stated it wants the biotech sector to make up 4% of its total economy by 2020. Based on the numbers at the time it stated this goal, that meant an explosion from a $5.4 billion industry to a $627 billion industry — or 116X growth — in just two years.
Back to Matt:
I said at the time that it may not happen that quickly, and I doubt it will. But I also said … who cares? If you could get 116X growth over five years, you’d want in on that, wouldn’t you?
To learn more about the specific Chinese (and U.S) biopharma stocks Matt believes are strongest, click here to learn more about his Early Stage Investor newsletter.
***Let’s now turn back to COVID-19, and which biotech stock Eric Fry recommends for investors looking to align themselves alongside a vaccine
Eric is our global macro specialist, and has recommended more 1,000%+ gaining stocks than anyone we know of in the investment newsletter business.
Last week, he wrote to his subscribers about investment opportunities emerging as our world races to find treatments and a cure for COVID-19.
You’ve likely heard about Gilead’s Remdesivir drug, and perhaps hydroxychloroquine. But both of these drugs would simply treat COVID-19, not eradicate it.
That’s why Eric is suggesting investors look elsewhere … to a leading vaccine developer targeting the virus — Moderna (MRNA).
From Eric:
The Cambridge, Massachusetts-based company’s efforts recently earned a high form of validation. It scored a massive $483 million contract with the U.S. government to develop the vaccine.
Moderna is using the $483 million to develop and test its promising COVID-19 vaccine. While plenty of biotech companies are racing to formulate a vaccine, most are unproven businesses with tiny market capitalizations and little track record of commercial success.
Moderna, by contrast, with a market cap of more than $16 billion, is a well-respected leader in the field.
Moderna’s vaccine is one of the first to begin human trials. A small human safety study with 45 healthy patients has been underway since March.
Eric goes on to note how there’s usually a long road between proposal of a treatment for vaccine and approval. And while Moderna may be on the fast track through testing, it’s still not a sure thing.
That said, Eric believes that for investors looking to play COVID-19, Moderna is a solid recommendation because it has the expertise and the funding to have a real shot at producing a working vaccine quickly.
For more from Eric, click here.
If the biotech sector — both here in the U.S. and in China — hasn’t been on your radar, it’s time to take a look.
Have a good evening,
Jeff Remsburg
