Fast Tech Profits: What Drives 1-Day Stock Pops
The biotech industry is one of the fastest-growing and most innovative industries.
The company recently made a biotech partnership with pharmaceutical giants Bristol-Myers Squibb and Pfizer to create a new technology that can detect the earliest signs of a stroke.
And that’s not all!
Biotech is making huge strides across the market thanks to 5G and advancements in genomic sequencing.
Overall, biotech is a sector on the rise.
And one reason is lower interest rates. See, when interest rates are lower, people are more likely to buy into speculative stocks — and biotech is one of the most speculative sectors on the market.
So, when the sector takes a turn toward profit, you can take home incredible gains in just one day!
Bold Profits readers have taken home 29% in a biotech stock in just one single day. And that’s just the beginning… They’ve locked in total gains of:
October 21, 2019
Amber Lancaster: Welcome to this week’s Market Talk. I’m Amber Lancaster, joined by Paul Mampilly. Each week we look forward to sharing our viewpoints and giving insight into what’s on our radar.
Today’s outlook is for the week of October 21, 2019. For this week’s update I’ll begin by sharing with you what I’m watching and then we’ll hear from and Paul.
Today I’ll cover three major topics. The first will be my take on recent and upcoming U.S. economic releases. Then my innovation story of the week followed by our Good News Roundup. Let’s begin.
Last week a leading indicator known as the U.S. Empire State manufacturing survey on general business conditions beat estimates. This monthly index takes a survey of 200 manufacturing executives in the state of New York. It rose to a reading of 4, beating estimates of 1. It’s good to note that the reading from this index is usually a reputable indication for business conditions for the overall national economy in the months ahead.
The survey showed that the employment index fell to 7.6% versus 9.7% prior and that the work week lengthened to 8.3 versus 1.7. Also, new orders were stable at 3.5. All good signs. Overall, last week’s New York manufacturing activity reading was positive and the survey showed advances in business conditions six months ahead look rosy.
Also, last week’s big headline showing a decline in housing starts, which includes multi-family dwellings, did not show what’s really going on behind the scenes. This chart from the National Association of Homebuilders, Bloomberg and the Census Bureau shows you homebuilding activity is marching higher.
Behind the scenes, single family housing starts are advancing. These starts have been moving upward for four straight months. Plus, single family housing building permits — the planned single home dwellings — increased for the fifth straight month. We haven’t seen five straight months of single homebuilding permits since 2016.
In all, new homebuilders are making changes and starting to build homes that are priced lower for new homebuyers. As mortgage rates fall, the opportunity to buy a new home is more accessible.
Where this week’s economic releases are concerned, there will be five major releases. On Tuesday, September’s existing home sales will post at 10 a.m. On Thursday, preliminary durable goods orders for September will post at 8:30 a.m., preliminary market U.S. manufacturing PMI for October will post at 9:45 a.m. and September new home sales will post at 10 a.m.
Lastly, on Friday, University of Michigan’s final sentiment number for October will post at 10 a.m.
Now for my innovation story of the week, which will be personal in nature. Last week I visited with a longtime family friend and while talking with them I noticed they suddenly had trouble speaking and appeared confused. Immediately I suspected they were suffering from a stroke and I acted FAST.
In stroke emergencies the acronym FAST means Face, Arm, Speech and Time. Thank goodness our dear friend received expedited medical care and the hospital physicians were able to administer medication that put them on the path to recovery.
I am happy to report they are back home feeling much better. This personal story brings me to a recent announcement from Fitbit Inc., the maker of wearable technology devices. Fitbit just announced a biotech partnership with the Bristol-Myers Squibb-Pfizer Alliance focused on the detection of atrial fibrillation (AFib) using Fitbit’s electrocardiogram outfitted devices.
Per MarketWatch, as AFib is a risk factor for stroke, the goal is to use technology to help patient’s detect this form of irregular heartbeat early on. Dr. Joseph Eid, head of medical at Bristol-Myers Sqibb said, “Too many people discover that they are suffering from AFib only after experiencing a stroke.”
“In fact, some studies suggest that this is true for more than 25% of people who have the condition.” With that, I can tell you that I will be buying a wearable device outfitted with an ECG for my dear friend today. As an owner of a smartwatch with ECG capability, I can save having a monitor of your daily heartrate and basic health is most beneficial.
Apparently I am not alone. I was just looking at markets and they are saying the wearable tech market is growing at a compounding annual growth rate of 15.5% and expected to reach $51.6 billion by 2022.
Now to our Good News Roundup stories. Good News Roundup story number one: As reported by Consumer Affairs, “foreclosure activity, default notices, scheduled auctions and bank repossessions all feel to a 14-year low in the third quarter of the year suggesting significant stability in the housing market.”
Good News Roundup story number two: HousingWire is reporting that “cheap rates will push 2019 mortgage volume past $2 trillion. This trend line shows we may be heading toward a 12-year high in lending volume.”
Good News Roundup story number three: Per Science Daily, if you want to live longer, especially among heart attack and stroke survivors, get a dog. “Dog ownership was associated with 33% lower risk of early death for heart attack survivors living alone and 27% reduced risk for stroke survivors living alone compared to people who did not own a dog.”
“Dog ownership was associated with a 24% reduced risk of all caused mortality and a 31% reduced risk for death by heart attack or stroke compared to non-owners.” As a dog owner, as you can see in this photo of my dog Alex, they are truly your best friend.
That’s it from me for today.
Thanks Amber. I’m here in New York this week in a co-working space in Brooklyn. It’s interesting what you’re talking about with the wearables. In our portfolio we have Livongo which does analytics for the data coming in for wearables. They’ve announced a deal with the Federal government with their healthcare plans to do something focused on diabetes.
Wearables is definitely something we are interested in, especially the ability to analyze the data. That’s going to be a big business.
This week in the IPO world we are, again, looking at WeWork. WeWork — the saga continues. The way it was supposed to work was they were going to raise money at various levels and they had a big growth push that was going to be financed by their IPO proceeds. This has now been shelved because of various reasons we talked about.
They were a little too aggressive with their IPO. They bungled the rollout and got a little greedy and had some internal problems in term of corporate structure. So it was back to the drawing board. They have a little cash flow issue and they had to delay their 2021 China expansion.
They still have a growth rollout they already put in place and it’s already progressing to find the cash they need to fund. They are raising $5 billion in financing and it’s either going to be SoftBank or JP Morgan Group. One of those two or maybe both together. They are working on it now.
We want to show you this chart of WeWork bonds. They have traded down and they’re coming back up. They are volatile right now but we expect financing to be completed and for the bonds to trade back up. When that happens, a lot of the pressure will come off the IPO market. People will be less worried about SoftBank, the main player in the IPO market that owns a few names including Uber.
Additional news, we saw Casper file for IPO. Casper is one of the new mattress companies. They are probably going to be responsible for getting rid of these huge storefronts and making that a thing of the past. In case you don’t know what Casper is, you order the mattress online and they send it to you in the mail.
It’s vacuum compressed and you open the package and it unfolds and inflates on your bed. It’s a good mattress, I have slept on Caspers before. They are coming public and we’ll see what the valuations and financials look like on that.
Another piece of news is Endeavor, an entertainment agency that owns UFC and is run by Ari Emanuel, they’ve been using rollups and a lot of debt to acquire a lot of small companies and improve their performance by adding value through being part of the company. It’s essentially a whole is greater than the sum of the parts strategy.
The problem is, they came to the market loaded with a bunch of debt. They wanted the IPO money to pay off that debt. The IPO market said no, we’re not doing that. Come at a lower valuation or de-risk this company before you bring it to us. They pulled that and they are going to reconfigure and give investors a better deal when they come back.
Finally, I want to talk about biotech this week. I think that’s Paul’s area of expertise.
Paul Mampilly: It definitely is. I’ve done a lot of biotech investing and continue to do it. I am interested in Progyny, even though it’s not technically a biotech company. It really gets to the heart of a lot of different things through insure tech. It’s the fertility market which, I believe, is another market that’s in a creation moment.
We have technologies like genome mapping that can really make this market completely change from where it is today. I have been reading some incredible things. It’s very controversial. Nonetheless, this is the first company that really addresses that market. If you are interested in that, check out Pual’s service.
This week we are doing biotech at Bold Profits Daily. Every Bold Profits Daily is going to deal with biotech because we see an extraordinary opportunity that’s unfolding. It starts at the very top. It looks like all the trouble in the market driven by interest rates rising, recession fears, an inverted yield curve, trade war, impeachment — all of these things are going away.
What we are seeing is, even if you just look at websites like MarketWatch or CNBC — I saw a headline on CNBC that said to forget the trade war because it’s earnings that matter. In other words, they said, “Oh, you sold all your stuff? Forget that we told you to do that.”
That bad news media is walking away from all the things they told you you should be so scared about that you should sell everything. We told you that while there would be volatility, there was no real risk. One of the things I have noticed from covering markets and biotechnology is this is a sector that really well into a rise after a period like that.
If you look at it, most biotech stocks are speculative. They have no sales, they have no earnings, they depend completely on the market to live. What they have is a lot of intellectual property that is or is not valuable depending on clinical trials, FDA approvals and however much value the marketplace assigns to those drugs with prescriptions.
Usually into a period like this people start to take all the money they set aside in cash and start to push it in. They also want some allocation to something that can go up and go up a lot. I can tell you biotech is a rocket ship. These things can go up and go up a lot.
If you look at what is going on, biotechs are interest-rate sensitive. As interest rates start to go down people start to push out and take more risk. Biotech is a place where people can see the risk-reward ratio and say, “I can put $1 in and make $100.” On top of that, there are so many things — things that Amber brought up.
Wearables are driving an enormous amount of data, 5G is facilitating a pipeline of data that can come from these wearables. On the genome side, there’s a push to get genomes to less than $100 so you can sequence them as often as you can. Eventually I believe it will be less than $1.
Just like so many things that are data driven, you eventually get down to where there’s no cost for it. You’ve got things like Crisper and any number of things. We’re seeing early signs this could be huge. Just in the last two weeks we’ve seen megadeals that show you the promise of what can happen in biotechnology in a hurry.
Alexion just last week bought Achillion. In a day, it was up 72%. Ra Pharmaceuticals was bought by UCB Pharmaceuticals, a big company in Belgium. Ra was up 100% in one day. This is the promise of biotech. You can make extraordinary gains really fast. Make sure you are subscribed to this channel to get all the things we have laid out for you this week.
This is a perfect moment for my shameless plug. If you click on the Strong Hands, it will take you to a page that will give you information about what you need to know about this new biotech bull market and what you need to do to get in on it. Make sure to click on the Strong Hands.
Overall, I want to say I’m optimistic about the stock markets. We’ve gone through what I believe is every pessimism scenario. People have counted on crashes, recessions and crises — we’ve gone through them. Earnings are coming and they’re going to be better than most people expect.
Interest rates are going down, inflation is nonexistent. I believe you want to be in and I believe biotech is definitively one of the places you want to be in. With that, back to you, Amber.
Amber: Great information as always, Paul. Thank you for sharing your insights. Thank you to our listeners and viewers for tuning in this week. We wish you a wonderful week. Until next time, take care.
For more of my thoughts on investing and industry news as it happens, be sure to follow me on Twitter @MampillyGuru.
And don’t forget to watch my Bold Profits Daily video tomorrow for three biotech stock sectors skyrocketing in a new bull market — and your way to buy in now.
Editor, Profits Unlimited