By Matt McCallDec 23, 2018
The recent weakness in the NASDAQ that has sent the tech-heavy index into a bear market has created a buying opportunity. Some of the hardest hit sectors are the ones with the brightest futures – the problem is they’re considered “aggressive” by typical standards.
Gene therapy stocks are a perfect example. These names have been hit hard and most are now sitting near 52-week lows.
It’s not uncommon for investors to sell stocks that are perceived as having above-average risk. And gene therapy fits that bill. Therefore, investors are selling now and asking questions later. But in reality they should be using the weakness as a great buying opportunity for the long term.
No matter what you feel is the cause of the current market pullback, I guarantee you it will not have any direct effect on the long-term success of the gene therapy stocks.
Trade with China? Nope.
The Fed raising interest rate two times next year instead one? Not at all.
A short-term government shutdown? Definitely not.
The bottom line is that now – when everyone else is selling for no good reason – is the time to buy. Not tomorrow. Not next year. Now.
Three companies in particular have caught my eye amid the recent selling. They’re trading at attractive levels and have huge upside potential in the years ahead. Let me tell you about them.
Genomic Health (GHDX) is a genetic testing company that helps with cancer treatment. Its leading product is an invasive breast cancer test that’s used to determine the likelihood of recurrence and the benefit of chemotherapy in early-stage breast cancer patients. It offers similar tests for colon cancer, prostate cancer, and ductal carcinoma.
The stock rallied to an all-time high in early November before succumbing to the overall market selling. It has now fallen into a bear market, but all this has done is allow long-term investors to get in at a steal.
CRISPR Therapeutics (CRSP) is one of the Big Three companies in the gene editing world. It has a slight lead in the race, as it made headlines in October when the FDA removed its clinical hold on the company’s gene therapy CTX001 to treat sickle cell disease. This milestone is very positive, but the company still has a long road ahead as it looks to gain approval for its products. Keep in mind, though, that all novel and cutting-edge therapies have had to take this same path.
There is big risk associated with betting on one small biotech company such as CRSP, but I am confident that approval is in the cars. That makes this a potentially huge winner in the years ahead.
Invitae (NVTA) provides genetic testing to the doctors and healthcare professionals who analyze certain genes associated with a wide variety of disorders. The company has referred to itself as the “Amazon of Genomics” because of its wide-reaching suite of tests.
Invitae is still losing money as it remains in its early stages of growth. But as long as it keeps working toward its big picture goal and exhibiting strong revenue growth, that’s okay. I look for both sales and gross profit to keep growing. And if that’s the case, Invitae, currently valued at $720 million, could be worth close to $4 billion in the coming years.
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