Tags: Cortes | biotech | stocks | S&P 500

Analyst Cortes: Biotech Stocks Have Room to Run

By    |   Friday, 25 April 2014 10:29 AM

After plunging 20 percent from March 4 to April 11, the Nasdaq Biotechnology Index has rebounded 7 percent.

And Steve Cortes, founder of Veracruz TJM research firm, thinks biotech stocks will ultimately head higher.

"Biotech has been a runaway winner and for a heck of a long time," he tells CNBC and Yahoo's Talking Numbers. "It has outperformed the S&P [500] for six of the last seven years. Until about six weeks ago, it was absolutely on fire. I think this is a healthy pullback."

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The Nasdaq Biotechnology Index has climbed 33 percent in the last year, and for the last five years it has soared 260 percent, compared with 114 percent for the S&P 500.

Unlike some other momentum stocks that have been flying to the moon, biotech companies have real earnings, Cortes points out. "When I look at Biogen, when I look at Gilead, are they expensive stocks? Yes. But they are profitable already."

In addition, the companies will benefit from aging populations. "I like healthcare in general and biotech specifically because that is really to me the most exciting place where demographic trends can result in profits down the road," he notes.

"I am unwilling to ever bet against the innovation of American scientists," Cortes adds.

Ziad Bakri, biotechnology analyst for the T. Rowe Price Health Sciences Fund, also likes big biotech companies.

"Among the large-cap, profit-generating [biotech] companies, valuations, while not cheap, are generally reasonable given potential growth," he told Barron's. "They are also, on the whole, well-run companies with good science, good pipelines and strong commercial products."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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InvestingAnalysis
After plunging 20 percent from March 4 to April 11, the Nasdaq Biotechnology Index has rebounded 7 percent. And Steve Cortes, founder of Veracruz TJM research firm, thinks biotech stocks will ultimately head higher.
Cortes, biotech, stocks, S&P 500
284
2014-29-25
Friday, 25 April 2014 10:29 AM
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