Risk On For Biotech - Time To Trade The Small Caps

By Rod Raynovitch of Raygent.com
Monday, November 6, 2023 1:08 PM EDT

Dna, Genetic Material, Helix, Proteins, Biology

Image Source: Unsplash


Buy a Small Cap Biotech Today

  • Seasonality favors small caps through January 2024 many are beginning to look good on technicals.
  • Strategy is based on Momentum but with compelling technology and M&A potential.
  • Lower rates are positive for biotech and M&A.

We saw many of our SMID Life Science stocks trade up big last week so we are tempted to be more aggressive adding speculative biotech positions. Last week we added CRSP to our longs and went into the volatile ETF the Ark Genomic  Revolution (ARKG) based on holdings and previous technical action. We will also track potential new trades in 10X Genomics (TXG), Vericel (VCEL) and Caribou Biosciences (CRBU). But as you can see the damage was severe in 2023 because the market preferred MEGA-TECH stock in 2023.

We also picked Becton Dickinson (BDX) up 2.9% last week to $258.91, FWD PE is 19.2, P/S 3.94, and Recommendation is 1.76. If you don’t want to pick risky biotech stocks then buy a core life science position with PRHSX or the IBB. PRHSX has among top holdings: UNH, TMO, REGN, LLY, MRK, etc.

We have summarized below some of the Small and Mid Cap (SMID) life science stocks that we own and recorded the trades in a post on February 26,2023 when speculative small caps started sinking. So we have trimmed back most of them.

Key Points to Consider:

  1. These stocks tend to move as a group and correlatesto the XBI.
  2. Buying comes more from bankers and biotech specialists rather than retail generalists.
  3. The following stocks are more senstive to sales and earnings: EVH, HOLX, QDEL.
  4. All small cap ETFS are trading with current momentum; IJR, IWM, XBI.
  5. The IBB looks more bullish after hitting bear market lows.

We will update the trades on Wednesday.

Selected Well Known SMID BIOtechs- a screen not a buy  list.

    P 1/20/23 % Perf 2/4/23     11/5/23 Perf      
Company Ticker $   P % week % Perf P Week % YTD % REC  
                       
Acumen Therap ABOS   5/8/23 5.29     2.19 -9.5 -59.44 1  
CRSPR Therap CRSP 49.61 -25 55.27 4.72 -15 50.99 31.62 25.44 2.03  
Cryoport CYRX 21.75 -42.34 25.24 9.41 -33 10.1 10.14 -41.79 2  
Evolent Health EVH 30.83 13.74 31.96 2.21 17.91 27.26 13.68 -2.92 1.2  
Geron GERN 3.19 9.24 3.22 3.59 10.27 1.98 10.61 -2.46 1.17  
Hologic HOLX 79.66 22.41 84.68 2.28 30.14 68.67 5.47 -8.21 2.15  
Immatics IMTX NEW   9.3     9.61 27.28 10.33 1.4?  
Pacific Biosci PACB 11.29 55.68 11.58 -1.7 59.67 7.22 1.55 -11.74 1.75  
Quidel/Ortho QDEL 88.13 -11.56 89.7 3.93 -9.98 64.27 5.4 -24.98 1.75  
Supernus SUPN 40.3 12.3 41.61 2.29 15.95 24.48 1.7 -31.37 1.5  
10x Genomics TXG NEW   47.84     39.72 9.09 9 2  
Vericel VCEL NEW   31     36.86 12.31 39.94 1.33  
Veracyte VCYT 24.89 39.43 26.67 2.46 49.41 24.46 24.04 3.08 1.8  
                       
SPDR Biotech XBI 86.99 14.75 90.39 1.12 19.24 71.46 11.45 -13.9    
                       
wildcard                      
ArkGenomics ARKG NEW   35.28     26.04 10.28 -36.56    
                       
              11/5/23        
iShares CoreS&P IJR           94.22 7.54 -0.44    
iShares Russell IWM           174.49 7.57 0.07    
iShares BIO IBB           119.79 6.57 -8.76    
NASDAQ-100 QQQ           367.71 6.49 38    
HealthcareSPDR XLV           127.41 0.5 -6.21    
                       
T.RowePrice PRHSX           84.82 – -5.57    
iShares MED Dev IHI           47.25 6.23 -10.12

More By This Author:

Healthcare Playbook: Hardly Defensive With A Covid Hangover In Biotech
Pivotal Week Coming Up: Big Tech Earnings, Geopolitics, Technicals, Treasury Yield...
Healthcare Portfolio Focus Stocks

How did you like this article? Let us know so we can better customize your reading experience.

Comments