Summary: The biotechnology industry has seen significant growth in recent years, with a number of companies working on solutions to global pandemics and diseases such as cancer and diabetes. Investors interested in gaining exposure to this thriving sector can register an account with a regulated stock trading platform such as eToro.
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What are biotech stocks?
Biotech stocks
The biotech sector can be quite diverse. Some companies focus on things like gene therapies, immunotherapies, and stem cell treatments. Others develop drugs based on biological processes instead of traditional chemicals. That is, they devise therapies using methods such as gene editing or cell engineering. As a result, biotech stocks can also offer unique and diverse investment opportunities with a potential for high returns.
5 best biotech stocks to buy in 2024
There is a myriad of companies operating in the biotechnology field. Thus, it can be challenging to identify the right opportunities that align with your investment goals. Therefore, we have compiled a list of companies responsible for the major advancements within the biotechnology industry.
Our top 5 biotech stocks to buy in 2024 are:
- Amgen (NASDAQ: AMGN);
- Pfizer (NYSE: PFE);
- Eli Lilly (NYSE: LLY);
- Moderna (NASDAQ: MRNA);
- Thermo Fisher Scientific (NYSE: TMO).
Note
1. Amgen AMGN
Amgen (NASDAQ: AMGN) is one of the leading biotech companies. It focuses on innovative solutions for various health conditions and produces some of the most widely bought drugs, such as Amgen and Enbrel, the latter of which generates more than $4 billion a year alone.
The company’s solid market capitalization (around $152 billion as of December 2023) and a strong portfolio of products make it an attractive option for investing in 2024. Moreover, the company has shown interest in acquiring Horizon Therapeutics (NASDAQ: HZNP), a company developing medicine to combat rare rheumatic diseases, whose $3 billion annual revenue could further strengthen Amgen’s position in the market.
Amgen stock price today
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2. Pfizer PFE
Pfizer (NYSE: PFE), a well-established pharmaceutical giant, is another promising biotech stock to consider for 2023. The company gained a lot of recognition in the past few years thanks to its COVID-19 vaccine, which demonstrated the company’s expertise in virology.
Additionally, Pfizer’s attractive dividend yield (5.92% as of December 2023) and solid market performance emphasize its potential for growth in the coming years. Moreover, the company plans to acquire Seagen (NASDAQ: SGEN), a company focused on antibody-based cancer treatment and running a large number of operations in the oncology field. If successful, the acquisition will likely further solidify Pfizer’s position as one of the most profitable biotech companies.
Pfizer stock price today
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3. Eli Lilly
Eli Lilly (NYSE: LLY) is a renowned pharmaceutical company with a focus on developing treatments for various health conditions. It primarily focuses on diabetes, with its signature drugs Humalog and Trulicity.
With a market capitalization of over $541 billion (as of December 2023), Eli Lilly is certainly high up in the pharma industry. The company also boasts a diverse portfolio, including products in clinical trials for cancer and other serious diseases. What’s more, the company is making a lot of breakthroughs in Alzheimer’s research, with its new drug, donanemab, poised to potentially propel it even further up.
Eli Lilly stock price today
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4. Moderna
Like Pfizer, Moderna (NASDAQ: MRNA) made headlines as a front-runner in the development of COVID-19 vaccines, proving its research and development capabilities and establishing itself as one of the leaders in the virology sector.
Moderna’s market capitalization of $36 billion (as of December 2023) and track record of profitability are solid reasons to consider adding Moderna to your collection of best biotech stocks. Additionally, Moderna has recently entered into an agreement with CARsgen, a Chinese tumor research company, to explore a novel approach to cancer treatment set to finish by the end of the decade. If successful, the trial has the potential to do wonders for Moderna’s stock price.
Moderna stock price today
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5. Thermo Fisher Scientific
Thermo Fisher Scientific (NYSE: TMO) is one of the leaders in providing solutions and equipment necessary for research, analysis, and diagnostics in the medical industry. The company produces a wide range of products for pharma and biotech companies, from basic hospital and lab equipment to something like cutting-edge gene analyzer devices.
Since it is mostly focused on providing equipment used by other companies and institutions in the sector, it is in a position to profit from a constant demand for said equipment. That makes it a potential solid long-term investment for more patient investors.
Thermo Fisher Scientific stock price today
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Note
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Things to consider when buying biotech stocks
Before you start investing, it’s wise to do your own research and familiarize yourself with various investment strategies and the nature of the stock market. Keep in mind that the biotech industry can be volatile, and as with all other stocks, investment success is never guaranteed. However, with the strategy, you can make informed decisions that increase your chances of capitalizing on the growth of the biotech sector.
When looking for biotech stocks to invest in, there are a few key things you should take into consideration to make better-informed decisions. For example, you can look at:
- FDA approval: Biotech companies rely on Food and Drug Administration (FDA) approval to showcase their legitimacy. An FDA stamp is, thus, crucial, as it can significantly affect the company’s reputation and, thus, revenue and stock price;
- Market capitalization: The larger the company, the better it is positioned to perform in the market. That is, larger companies with higher market capitalization usually have a more diverse product pipeline. This makes them more stable as they do not depend on a single source of revenue;
- Dividends: While some companies, like Pfizer, have solid dividend yields, others, like Moderna, do not. If you’re looking for a combination of growth and income, consider companies that have a history of paying dividends;
- Current portfolio and future growth: A company’s current product portfolio can provide a steady revenue stream. However, companies making acquisitions and branching out have the potential to outperform the competition since the biotech industry thrives on competition;
- Risks and volatility: Biotech stocks can be more volatile than other sectors due to the nature of the industry. Therefore, be prepared for sudden and drastic changes in stock prices as a result of clinical trial results, regulatory decisions, or market sentiment.
Pros and cons of investing in biotech
Investing in biotech stocks can offer great opportunities for growth and returns, but it’s important to be aware of the risks involved. Some of the pros and cons of investing in biotech stocks include:
Pros
- High reward potential: One of the main advantages of investing in biotech and pharma companies is the potential for high rewards. That is, biotech companies are often responsible for the development of innovative treatments for various diseases. If a company is capable of bringing a new, revolutionary drug to the market, it can see its revenue grow and its stock price go up;
- Solid growth potential: Another advantage is the potential for high growth. Indeed, biotech companies often reinvest their earnings into research and development of new products. As a consequence, they tend to see a higher price-to-earnings ratio compared to other industries;
- It can give you a sense of satisfaction: Investing in companies seeking to eliminate diseases such as cancer can give ethically conscious investors a chance to feel like they are making a positive contribution.
Cons
- Volatility: The biotech industry is highly volatile. Developing new drugs and doing lab research is incredibly expensive and time-consuming, and success is never guaranteed. Consequently, many drugs fail in clinical trials, resulting in high financial losses;
- The industry is competitive: The biotech industry is driven by competition since a lot is at stake. Indeed, with so many companies working to develop new drugs and treatments, it can be tough for a company to stand out, especially if it is new;
- Some companies have low dividend yields: Some companies in the industry are known to have low or no dividend yields at all.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about the 5 best biotech stocks to buy in 2024
Are biotech stocks a good investment in 2024?
Investing in biotech stocks can be risky because their performance depends on the success of clinical trials and FDA approvals of various drugs, as well as on the supply and demand of various medical laboratory equipment. However, such investments can also be profitable, especially if you invest in companies with a solid track record and consistently solid revenues.
How to buy biotech stocks?
To buy biotech stocks, investors can register an account with a regulated online stock trading platform such as eToro.
Are biotech stocks a risky investment?
All stock investments are inherently risky. However, the biotech industry can be a bit more volatile because of the uncertainties and risks involved with things such as clinical trials.
What are the top 5 biotech stocks to buy in 2024?
The top 5 biotech stocks to buy in 2024 include Amgen (NASDAQ: AMGN), Pfizer (NYSE: PFE), Eli Lilly (NYSE: LLY), Moderna (NASDAQ: MRNA), and Thermo Fisher Scientific (NYSE: TMO).
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