You are probably familiar with investing in stock markets, but before jumping straight into decision-making, first, you need to realize what biotech stocks mean.
Biotech or biotechnological companies rely on living organisms to conduct their research & develop a product that serves in the medical, agricultural, & technological fields. The biotech farms take longer than usual time as they have to research thoroughly before coming up with a patent. That’s why their lead time is comparatively higher than most other companies.
Once their stock is up on the market, it keeps generating profit at a decent rate for a more extended period.
Reasons to Invest in Biotech Stocks
Here comes the most intrinsic question, why? Why biotech? You will probably refer to some of the most successful & famous stocks; Google, Apple, Twitter, etc.
But most people don’t know much about these biotech stocks. The reason behind these stocks being so underrated is that you won’t necessarily feel their influence as you think of Tesla or Twitter.
Imagine a scenario where you are walking by the street. A Tesla just passed you, & you quickly uploaded that picture on Twitter. You will understand the value of Tesla or Twitter because you are observing or using these daily. But you don’t see much of the biotech products.
That’s why most people mistake the biotech stocks for being outdated, whereas the actual picture is somewhat different. Some even claim biotech stocks to be free from market restraints.
For example, Jeff brown talks about how, in the near future, tech stocks can crash, and certain biotech stocks can skyrocket. He has even estimated one biotech company’s stock to go 5,900%. To know more, read the article here.
Biotech stocks are for those who want to look ahead. We will explain why you should invest in Biotech Stocks rather than the other stocks:
1. Availability of Stocks
The strike of COVID-19 was a bolt from the blue for the stock market earlier this year. As a result, the stocks suffered a plummeting consequence. The economy faced a screeching halt too.
But it was the scene of March earlier this year. The situation has changed after that.
The good news is, stocks are again on sale. However, the value & price of some of the stocks cascaded rapidly. And no one can assure you that the stocks won’t go down again.
But it also opens up a surpassing opportunity for you. You can now buy the stocks at a much lesser price than usual.
This is what happened with numerous biotech stocks. Some of those stocks faced a brute nemesis. Thanks to the pandemic, the situation is changing now. These biotech stocks are drawing more & more attention now. So, what are you waiting for?
Although you may get caught up in the fact that the price may go down again, it isn’t happening anytime soon. If your target is a more extended period (at least five years), this is a risk worth taking.
2. The Promise of Treatment
Being quarantined for so long, people want to get back to everyday lives. To do so, they will need a remedy of this pandemic, a vaccine. That’s the promise of most of the biotech stocks.
Already, several firms have started working on making a vaccine.
As these biotech companies’ sole purpose is related to medical advancements, people have started to evaluate them. It is now the actual big thing on the stocks’ market. If you want to secure a future, look ahead 5-10 years. The answer lies in investing in biotech stocks.
3. Minimum Market Competition
Most renowned stocks went extinct, facing a severe downfall in the stock market at the beginning of the pandemic. As for the remaining ones, their price went down by almost 50-60%.
Also, the attention of the market has turned to the biotech sectors, hoping to have a breakthrough.
People are not sitting idly too. They are investing in biotech, realizing the vast profits in the next 5-10 years. In a sense, the biotech stocks are reigning alone in the market for quite a while now.
If you want to secure a low-risk output, investing in the biotech stocks is a safe play.
4. COVID-19: A Gateway
Biotech stocks have attracted a particular niche for a long time—the retired people. These people are left with a lump sum amount at the end of their job life, & they invest in the biotech stocks for a secure future.
However, this case has changed drastically. People aged between 20-40 didn’t use to invest for a longer period before. Even they are investing now due to the COVID-19 situation.
Various well-known pharmaceutical companies have already started working on making vaccines.
Even those stocks that faced tremendous downfall last year have recovered well. There are plenty of reasons to be skeptical. The highest-grossing stocks of these days: Vertex Pharmaceuticals, Novavax, Immunogen, and Moderna. Some of these have a massive 200% rise in value.
5. FDA’s Upward Approval Trajectory
FDA (Food & Drug Administration) has broken its record of scrutinizing approval for drugs.
This year FDA has already approved 40+ drugs, whereas they had a limited approval rate of only 30-35 medications for the last ten years. FDA being co-operative to consenting, more & more farms are fighting to get the first patent on their name. Thus, the value of their stocks has seen an upward trajectory.
Think of those stocks that are already at a 200% increase. What will happen to their stocks when they launch worldwide? The value of those stocks will increase drastically.
Why Invest Now?
Assuming that you have got a clear notion of the importance of investing in biotech stocks, let’s answer the next question, when? If the answer’s now, why now?
The answer is pretty simple yet inconclusive. The answer is simple because you can’t possibly time the market now. As you can’t time the market, you won’t also know when the next crash will hit the market.
That means you can seemingly buy new stocks now & hold them for a longer time. Nobody knows where the stocks will be in the coming months. So, you can always count on the long haul if you buy a slice of some portfolios of highly grossing companies.
Biotech stocks are volatile. However, they are on the rise now, and it seems like biotech will stay on an upward trajectory for a significant amount of time. Most importantly, study the market thoroughly before buying any biotech stocks to stay in the game.