Profit From Biotech Innovation in 2021
It’s Predictions Week here at Smart Profits Daily.
And you should know … I have a history with these essays.
If you bought one of my recommendations that year — Carvana Co. (NYSE: CVNA) — you would now be up more than 600%.
Last year, it was all about biotech.
And of course, 2020 followed. That brought volatility.
However, Atara Biotherapeutics Inc. (Nasdaq: ATRA), one of my picks from 2019, is up 304% from its March 2020 lows.
Overall, the two names I recommended last year are up an average of 44% since the essay was published.
Not too shabby given the S&P 500 Index is up 12% over that stretch, and the Dow Jones Industrial Average is only up 4%.
I take these predictions seriously. I put a lot of thought into them.
This year, I’m combining my last two years of predictions. I’m betting on hated stocks and biotech.
The Insiders Are Hungry
Today, I’m focused on biotech.
(If you want to learn about a hated sector that should easily double next year, check out my video on Thursday.)
In my Profit Line service, we follow insiders into trades. After all, no one knows their business better than the officers and directors of a company.
That leads me to one of today’s recommendations.
Check out this four-month chart. The green boxes reflect insider buys. There were no insider sells.
Insiders Are Betting on This Biotech Stock
The chart belongs to $134 million market cap BioSig Technologies Inc. (Nasdaq: BSGM).
It was down recently, but you can see that’s changing.
Founder and CEO Kenneth Londoner has bought more than $200,000 worth of shares since November 6. He’s already up 23% from his average buy price.
We want to follow him to profits.
BioSig is an early-stage med-tech company. It makes systems for electrophysiology (EP) centers.
These devices create high-resolution cardiac signals, which provide heart doctors with better data to study and treat arrhythmias, or irregular heartbeats.
Here’s an example:
(Source: BioSig corporate presentation, fall 2020.)
The company’s Food and Drug Administration-cleared Pure EP system highlights issues more clearly than the systems we’ve used for years.
Heart disease is the leading cause of death in the U.S. And these procedures are urgent.
Delays increase the risk of stroke and can worsen the outcome for the patient. So, insurance companies increased reimbursement rates for these procedures in 2020.
Thanks to BioSig, the data are more accurate and the procedure time is shorter. This allow doctors to see more patients in a given time period. That’s a win-win.
BioSig has now done more than 350 procedures … and counting.
Six EP centers have installed its Pure EP system. The first was the Mayo Clinic in Florida in January of this year.
We should see two more by the end of the year. And one analyst expects double-digit installations in 2021.
I expect shares will at least double over the next year.
To be clear, BioSig is more speculative than a large pharma firm because it’s young.
Its growth trajectory adds to the upside — but any missteps could push shares down again. (Although, I don’t anticipate that.)
A Stellar Biotech ETF
To complement BSGM, my other idea is a basket of small-cap biotechs.
Its upside isn’t quite as great. But the fact that it holds a lot of names reduces your company-specific risk.
The Invesco S&P SmallCap Health Care exchange-traded fund (Nasdaq: PSCH) is a $420 million fund. It holds 71 biotech stocks … and has a stellar history.
PSCH Keeps Going Higher and Higher
Since it began trading in April 2010, PSCH shares have risen each year.
Its total return over this period is 520%!
This is because it buys solid names.
For example, its top holding, NeoGenomics Inc. (Nasdaq: NEO), was up 132% last year, and is 53% higher so far in 2020.
PSCH also owns small, growing names.
The average market cap of its top 20 holdings is $2.8 billion. The average of the S&P 500 is $63 billion.
The fund’s small-cap names simply have more room to run.
It’s a great way to see biotech upside in a more diversified way.
Profit While You Enjoy Life
Medical innovation is helping us live longer.
Biotech is at the forefront of this.
You owe it to yourself to profit from it.
Last year, it was an important driver of health … and investment returns!
I expect that to continue.
Editor, Profit Line