Three High-Flying Biotech Stocks

Alan Farley
Updated: Dec 10, 2020, 15:16 GMT+00:00

The biotech sector is wrapping up a bullish year, with the Biotechnology Index Fund posting a 25% year-to-date return.


In this article:

The biotech sector is wrapping up a bullish year, with iShares Nasdaq Biotechnology Index Fund ETF breaking out above the 2015 high and posting a 25% year-to-date return.  The COVID-19 pandemic has put a fire under many lesser-known names, including companies researching compounds and therapeutics not directed at defeating the virus. Many of these issues will close near all-time highs on Dec. 31, perfectly positioned for additional 2021 upside.

Let’s look at three mid-cap biotech stocks trading near all-time highs. It’s tough to choose just three because broad-based buying interest is moving the sector, lifting newly profitable companies as well as perennial laggards. Mid-cap is often the sweet spot when speculative fervor runs high, as it is right now, because shareholders are less likely to wake up to a 40% or 50% overnight haircut, triggered by a FDA denial or ill-timed secondary offering.

Beam Therapeutics

Beam Therapeutics Inc. (BEAM) develops precision genetic medicines and therapies for a wide variety of illnesses that include sickle cell, leukemia, and central nervous system disorders. The company came public at 24 in February 2020 and carved a trading range between the upper 20s and mid-teens, finally breaking out in October. The stock has more than doubled in price in the last month and has gained ground in every session since Nov. 25.

Pacific Biosciences of California

Pacific Biosciences of California Inc. (PACB) designs and manufactures DNA sequencing systems for a wide variety of research and therapeutic applications. The stock underperformed for years, trading as low as 2.20 during the first quarter’s pandemic decline. However, it’s risen tenfold since that time, breaking out above the 2011 high in the upper teens. Strong support in the mid-teens could offer a low risk buying opportunity during a pullback.

Fate Therapeutics

Fate Therapeutics Inc. (FATE) develops cellular level immunotherapies for cancer and immune disorders. The stock hit an all-time low in single digits in 2016 and entered an uptrend that posted a new high in 2018. The upside has exploded in the fourth quarter of 2020, more than doubling the stock price to an all-time high in the low 90s. Bullish price action just posted two sessions of five times average daily volume, highlighting intense demand.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

About the Author

Alan Farley is the best-selling author of ‘The Master Swing Trader’ and market professional since the 1990s, with expertise in balance sheets, technical analysis, price action (tape reading), and broker performance.

Did you find this article useful?