2 Must-Own Biotech Stocks To Buy In May

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Biotech stocks experienced a massive rally in 2020. The SPDR S&P Biotech ETF (XBI) soared over 110% from April 8, 2020, until its high on Feb. 8 of this year. This was more than twice the S&P 500’s gain of 42% over the same period. The industry rose on the excitement of potential COVID-19 treatments and vaccines.

However, since February of this year, shares of biotech companies have underperformed. Many stocks in the industry were stung by setbacks in clinical trials, a rotation away from growth stocks, drug-pricing reforms, and delayed drug approvals. But I believe the selloff is overdone, as these factors weighing on the industry are temporary.

The overall bullish growth story for biotech innovations and advancements remains. Traders are starting to agree with me, as XBI has been trending upward over the past couple of trading sessions.

Investors are starting to realize that while COVID-19 is improving in the United States, there are still parts of the world, such as India, that are plagued by the virus. This means eyes are back on biotech companies, as the pandemic not only brought attention to companies working on vaccines but also biotechs that were not.

That is why I am recommending Gilead Sciences Inc. (GILD) and Vertex Pharmaceuticals Inc. (VRTX), two biotech firms I believe will see their shares rise in the months ahead.

Gilead Sciences Inc. (GILD

GILD develops and markets therapies to treat life-threatening infectious diseases. The firm specializes in HIV and hepatitis B and C. While it has been a pioneer in developing drugs for the treatment of HIV, it also develops treatments for liver diseases, hematology and oncology diseases, and inflammation and respiratory diseases.

The company was granted full approval by the FDA to use Veklury (remdesivir) to treat patients with COVID-19. GILD announced late Monday that it would assist local manufacturers in producing the drug and immediately send 450,000 vials to India. The company generated $2.8 billion in sales of the drug last year.

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