3 Attractive Industries For Investment

The "green-dot" opportunities here are up-and-coming brands that are disrupting the incumbents in new and novel ways. For example, Monster Beverage (MNST) delivered a 1,400% return over the past decade - one of the best performing stocks in the entire market. Is the next Monster out there somewhere?

Branded Pharmaceuticals (especially Biotech)

While we are not big fans of the generic pharmaceutical industry (it is a commodity market), there are still some attractive opportunities within the branded pharma space, particularly within the biotech realm.

This industry has its good points. There is a natural moat provided by patent protection (a regulatory barrier), which can protect high profits on a drug for a decade or more. In many cases, treatments target chronic diseases, necessitating ongoing, recurring purchases of a product. Also, the demographic and social trends noted in the medical device section holds true here. On the whole, demand for healthcare - including pharmaceuticals - is a secular growth market worldwide.

However, one needs to be careful wading into this space. Chemically based compounds are easily copied by generics companies, who are quite good at challenging patents, and even better at destroying branded sales once off-patent. There is an ongoing pressure for these firms to successfully develop new and novel drugs through their pipeline to replace sales from products that go off-patent. Big pipeline failures can lead to abrupt and massive drops in stock value.

In general, the "green-dot" opportunities here have a few characteristics. One, they have a wide portfolio of revenue producing products - at least 4 major contributors instead of the numerous one-or-two product pharmaceutical firms out there. Two, they are considered a "biotech", with biologically based drugs which are much harder for generic firms to copy. Three, the company has a strong pipeline with which to grow. One good example of a company meeting these criteria would be Celgene (CELG).

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