This is Why Biotech Stocks Could Race Higher

Sep 16, 2022
Diagonal model of abstract DNA double helix, glowing in virtual space. 3D render.

The biotech boom has been explosive – with no signs of slowing.

For one, “Acquisitions by big pharma companies, strong earnings and a promising regulatory environment have helped biotech stocks stage a turnaround. And the tantalizing prospect of good news involving CRISPR gene editing later this year adds more fuel,” says Investor’s Business Daily. 

Two, the sector is still one of the safest, most recession-proof investments around.   

Three, an aging population is demanding more treatments in an effort to live longer lives.  As this number continues to grow, we’ll see a need for more medical treatment options.   There’s also incredible new innovation in genetics and technology.  In fact, over the next several years, genetic testing and gene editing will help to identify and potentially cure diseases.  

Even better, the biotech M&A boom has been explosive.

So, how can investors potentially profit from the boom?  

One way is to consider a biotech ETF such as the SPDR S&P Biotech ETF (XBI), which last traded at $92 a share.  Some of the ETF’s top holdings include Global Blood Therapeutics, ChemoCentryx, Beam Therapeutics, Editas Medicine, and Fate Therapeutics.

Another hot ETF to consider is the IBB ETF, which holds dozens of stocks, including Amgen, Vertex, Gilead Sciences, Illumina, Regeneron, and Biogen to name a few.  The IBB, which has an expense ratio of 0.44%, last traded around $124.

A third way to trade the biotech boom is with the Ultra NASDAQ Biotechnology ETF (BIB).  With an expense ratio of 0.95%, this ETF holds stocks such as Codiak Biosciences, Tonix Pharmaceuticals, Molecular Templates, and Applied Therapeutics.