Unless this is the first piece of my research you’ve ever read, you know I’m wildly bullish on stocks for the next decade.
I believe widespread innovations happening right now in technology, healthcare, energy production, transportation, and more will massively increase our productivity and efficiency … and create tsunamis of wealth for informed investors.
However, there’s one sector that I predict will outperform all others in 2020.
If you want to make real money this year, you must have investments in this sector.
Let me tell you about it … and give you a few ideas to get you started.
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.
The biggest winner of this transformative mega-trend will be biotech stocks, especially small biotech stocks set to grow large, like my most recent Early Stage Investor recommendation. It surged more than 100% in just a little over a week.
Biotech went on a big run in the fourth quarter of 2019. The Nasdaq Biotechnology Index rallied more than 25% from early October to late December. The sector pulled back in January with everything else but rebounded to a new 52-week high this past Tuesday. That’s significant, and a move above the all-time high from nearly five years ago would constitute a major breakout.
I believe we will see that breakout this year, and it will be the start of a multi-year bull market in this incredibly exciting sector.
Another sign of a hot sector is an increasing number of deals, and that brings me to the second reason why 2020 will be the Year of Biotech.
Through the first three quarters of 2019, there were $195 billion in mergers and acquisitions (M&A) in the biotech and pharma sectors. That was the second largest total ever, exceeded only in 2015 when the index hit its all-time high.
Larger firms paying up for smaller companies is always a positive sign — and it can be great for owners of those smaller companies. A large company would not pay a big premium for a smaller company unless it believed valuations will rise in the coming years.
And then there’s the IPO market. A bunch of biotech/healthcare-related IPOs over the last year have done extremely well. My team and I also looked at the best-performing IPOs of late, and nearly every one in the top 20 is a biotech or healthcare company.
These are companies most people have probably never heard of. Karuna Therapeutics (NASDAQ:KRTX) is up 500% … Applied Therapeutics (NASDAQ:APLT) is up 390% … Turning Point Therapeutics (NASDAQ:TPTX) is up 245%. Just looking at the list gets me fired up.
The breakout I foresee taking place in 2020 should be the beginning of a great decade for biotech stocks. As new drugs and treatments make their way through the FDA pipeline to eventual approval, new multi-billion-dollar companies will be created. We want to own these companies early.
Making the Big Money
During the last biotech boom (2008-2015), the AMEX Biotech Index gained 777%. Investors had the opportunity for life-changing gains. Exact Sciences (NASDAQ:EXAS) soared 54X … Regeneron Pharmaceuticals (NASDAQ:REGN) ran 34X … and Incyte (NASDAQ:INCY) gained 31X.
I believe select biotech stocks are poised to give investors another opportunity for similarly huge — or even bigger — gains as we head into the Roaring 2020s.
There are many ways you can make money on what’s to come.
There are the big, established biotech stocks like Amgen (NASDAQ:AMGN). And there are the big pharma companies like Bristol-Myers Squibb (NYSE:BMY), which paid $74 billion last year to buy Celgene. Or AbbVie (NYSE:ABBV), which spent $63 billion to acquire Allergan.
Or you can buy an exchange-traded fund (ETF) like the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB). If the sector does as well as I expect, you should do well.
But … you can do even better by owning smaller companies that bring a breakthrough product to market, develop a new technology, or get bought out.
It’s interesting. I did a ton of research for my recently announced Microcap Millionaire Portfolio, and it ended up that four of the 10 stocks currently in the portfolio are healthcare/biotech related.
One is a very small healthcare IT company. If it captures just 0.5% of its market, it would increase nearly 5X in size.
Two of the companies are incorporating artificial intelligence into healthcare, which I see as a huge opportunity. One uses AI to detect cancer early, and the other uses AI to create next-generation drugs.
And the fourth is a Chinese company that helps other biotech companies bring their products to market. The Chinese government has publicly declared that it wants its biotech industry to grow more than 100-fold in a short period of time, and this stock is set up to be a big winner.
Whatever your choice, consider having biotech stocks as part of your portfolio. The prospects for breakthrough treatments in the 2020s has me more excited about the opportunity in biotech than I have been in many years.
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.