While it tends to fly under the radar for many people, the biotech industry has seen a resurgence in investor interest over the last couple of years. While there could be several reasons for this, such as the COVID-19 pandemic bringing the value of biotechnology to the forefront or even the expansion of education in the biosciences, the fact remains – biotech is getting more attention than ever before. Nowadays, both institutional and retail investors are discussing which are the best biotech stocks to buy for their portfolios.
My perspective on biotech comes from dedicating three years to researching tropical diseases such as arboviruses and parasites. As a result, I believe the biotech industry’s moneymaking potential relies on its reach. In other words, the companies that produce the most broadly applicable drugs with patient populations capable of affording them, or at least governments willing to subsidize them will profit most. Thus, here are three of my picks on the best biotech stocks to buy this May, based on technological potential and financial trajectory.
Gilead Sciences (GILD)
While much of the developed world has moved past the co-morbidities of viruses and bacteria, a few major viral strains still cause significant strain on patients. Moreover, a recent study from Yale University found that new cases of cancer increased by 100,000 from 1.9 million new cases in 2022 to over 2 million in 2023. While a heartbreaking statistic, it underlines the importance and potential of cancer drug developers like Gilead Sciences (NASDAQ:GILD).
The company has had an exceptionally hard year so far, with nearly 20% of its stock value vanishing year-to-date. This is partly due to its dramatic losses in Q1, 2024, but also due to a relatively low investor confidence in its trajectory.
However, Gilead currently performs research on several major diseases including HIV/AIDs, RSV, and Hepatitis B/C. As it strengthens its drug offerings for these viruses, alongside developing new cancer treatments, its stock could likely rise to meet many of the outperform ratings analysts have given it.
Thermo Fisher Scientific (TMO)
Always focused on the future, Thermo Fisher Scientific (NYSE:TMO) is considered a pure biotechnology developer. Up a generous 7.6% in the last month, TMO has recovered from the April market slump that many stocks fell into. Moreover, the company remains dedicated to advancing diagnostic and research technology in the medical world.
This means that TMO sells the tools needed by other biotech and biopharma companies for them to prosper. Through this business model, TMO has stayed exceptionally relevant and therefore stable, over the last five years. Moreover, the company is a standout among biotech firms, as 94.41% of biotech companies are considered money-losing according to NYU Stern.
One of the firm’s more interesting projects is its improvement of organ transplant outcomes through its CXCL10 testing service. This urine-based test for detecting CXCL10 chemokines may improve life for nearly 250,000 Americans living with a kidney transplant, representing a significant population of potential revenue. Thus, TMO remains one of the best overall biotech stocks to buy this month.
Novavax (NVAX)
Following months of trading at rock-bottom prices, Novavax (NASDAQ:NVAX) saw some exceptional movement in the last couple of weeks thanks to a licensing deal with Sanofi (NASDAQ:SNY). With all the hype around the stock, some have even started calling it a meme stock, but I believe the potential is real for a different reason.
For a money-losing firm like Novavax, a $1.2 billion investment from Sanofi represents a lifeline that could help reverse the trajectory of its stock value. That’s because, for biotech firms, the game is all about surviving long enough to put a groundbreaking drug or technology on the market. In the case of Novavax, the company has consistently grappled with some of the most difficult diseases to develop vaccines for, such as the Ebola virus.
This has led to monumental expenditures and price fluctuations but represents a company with the will to go on regardless. Now that it’s flush with cash, NVAX could be on a new trajectory moving forward.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
