When Louis Navellier and I walked out of the studio after last Tuesday night’s Early Warning Summit, we were both confident and pumped.
Confident that 2020 will be a big year for select stocks … and pumped at the incredible opportunity investors have to make a lot of money.
I want to share one of the biggest of those opportunities with you today.
Big things are stirring in the biotech sector, and it’s got me incredibly bullish as we close out the year and look toward 2020.
In fact, 2020 could easily go down as The Year of Biotech …
Next year marks the 20th anniversary of the sequencing of the first human genome. We could see quite the celebration, as researchers’ efforts to develop new drugs in a variety of categories are starting to pay off in amazing ways.
I’m talking about plans to “fix” errors in our genetic code that can lead to awful and painful maladies, like sickle cell disease. Or engineering special immune cells from within our own bodies to deliver targeted cancer treatments — a process known as immunotherapy.
These breakthrough treatments are finally starting to gain approval by the FDA and make their way into the mainstream conversation after decades of research and clinical trials.
I recommend specific gene editing and other biotech plays to my subscribers because of the dramatic upside potential ahead. Radical new treatments coming onto the market could change the way we treat deadly diseases like cancer.
But it’s even more than that. It’s also about the growing earnings and stronger stock performance of the best plays in this dynamic sector.
After mostly sideways movement earlier in the year, the market started to take notice too, beginning in October.
In the chart below, you can see how the Nasdaq Composite (the orange line) started to break away from the biotech sector, represented by the industry bellwether exchange-traded fund (ETF), the iShares Nasdaq Biotechnology ETF (IBB, the blue line).
If you look closely, you’ll see that this divergence started happening in April, the same month that Sen. Bernie Sanders filed his Medicare for All Act in the U.S. Senate.
Such a law could drastically cut drug prices and hit the biotech sector where it hurts. The heated political climate surrounding this issue certainly didn’t help biotech stocks for most of the year.
We saw a similar situation play out in the ramp up to the 2016 presential election, when Hilary Clinton began talking negatively about price hikes for pharmaceuticals in the wake of scandals surrounding firms like Valeant Pharmaceuticals — now Bausch Health (NYSE:BCH) — and Turing Pharmaceuticals.
Folks mostly steered clear of the sector for the past four years or so. The iShares Nasdaq Biotechnology ETF went nowhere.
But look at that first chart again to see what’s been happening as we head into 2020. We’re seeing new signs of life in biotech stocks.
The SPDR S&P Biotech ETF (XBI) has climbed 31% so far this year and recently reached a new 52-week high following a wave of acquisition deals sweeping over the sector.
Several of the world’s largest biotech juggernauts are snapping up smaller firms that specialize in treatments for cancer and autoimmune disorders. The major players in this industry don’t want to miss out on what’s coming down the pike, especially when many of them rely on profits from older drug patents that are set to expire.
By 2024, research firm EvaluatePharma expects the global cancer-drugs market will nearly double from $123 billion today.
The FDA has also begun approving new cancer drugs after smaller, quicker and less-costly clinical trials — a win for the industry. Plus, health insurance plans have shelled out top dollar for some of these expensive treatments that can cost $100,000 or more per year.
As they buy up smaller biotech firms and their products, individual drug companies are also looking to establish multiple therapies for specific diseases that work better in the outcomes-based payment model the government is starting to take.
Not only that, but prices for healthcare companies are just how I like them — cheap. In fact, healthcare is the second cheapest sector in the market right now, and the only one that’s been growing earnings, year-over-year, according to Fortune.
That’s a lot of catalysts joining forces behind this sector right now, but there’s another one on the horizon that I believe could send biotechs soaring into the stratosphere.
You see, if President Trump wins his reelection bid in 2020, it will be a huge win for biotechs. In that case, we’ll likely see FDA approvals increase and drug prices maintain their healthy level.
But even if he doesn’t, it’s unlikely a Medicare for All type of law passes through Congress. Polling by the Kaiser Family Foundation shows that even Democrats and Democratic-leaning independents largely prefer more incremental changes to healthcare.
Biotech’s Big Year
Mark my words — 2020 will be the year of biotech.
Of course, not every biotech stock will make you money next year. You’ll still need to know how to play this highly complex market to your advantage.
This is true in biotech, and it’s true in other sectors as well. There are big opportunities ahead in 2020 if you know where to find them.
That’s why I am so excited to join forces with my good friend and fellow InvestorPlace colleague Louis Navellier. We’ve built our careers using different methodologies to identify big winners. We’ve combined my big picture “top down” approach with Louis’s quantitative, numbers-driven “bottom up” style.
We’ve just unveiled our thoughts on 2020 and what you need to do to set yourself up for what we both expect will be a major year for stocks.
We’ve also come up with stocks that our two systems have identified as on the verge of major breakouts in 2020. One is a biopharmaceutical company that develops medications needed by large patient populations, which fits right into the hypergrowth trends I follow. Louis also sees big potential because the company meets his strict quantitative growth criteria.
You can watch our full discussion here at our just-released Early Warning Summit 2020.
I hope you’ll take a moment to watch it now. I’m not hearing this kind of analysis and discussion anywhere else, and I’m afraid too many investors are going to miss out on what’s to come. I don’t want that to be you.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.