Biotech stocks have made a comeback, writes Saumya Vaishampayan at the Wall Street Journal. The Nasdaq Biotechnology Index hit its low of the year in September but it has clawed its way back and has risen some 18 percent since then, bringing it now up 13 percent for 2015.
"It has outpaced the broader market since the September trough, and that puts the sector back on familiar footing: Shares of drug and health-care companies rallied more than the market in recent years as investors sought companies that have the potential to boost earnings and revenue," Vaishampayan says.
That autumn dip, she notes, was due to increased political scrutiny of drug prices. But those lulls also offer a chance to buy companies.
Biotech is "one of the best areas for growth," David Klaskin, chief investment officer at Oak Ridge Investments, tells the Journal. Over time, he says the aging US population and the Affordable Care Act should increase healthcare spending and, with it, biotech stocks.
Investors tell Vaishampayan, though, that the sector will likely remain volatile through 2016. "[B]ut I look at that as more of an opportunity to buy into some companies that have good [drug] pipelines and generate good cash flow," Bob Landry, portfolio manager at USAA Investment Solutions, says.