So, how has Gilead’s stock done? Since bottoming out on April 11, it has rallied some 25%.
I’ve been saying here – and elsewhere – for months that biotech is one of the best long-term investment opportunities in high tech.
And during the sell-off this sector became way oversold.
I’m not the only one who believes the biotech sector was oversold. A new report from Credit Suisse AG (NYSE ADR: CS) says that – thanks to strong fundamentals – the biotech resurgence has plenty of legs.
Credit Suisse notes that large-cap biotech stocks are trading at 13.5 times estimated 2016 earnings. The brokerage says that turns the dynamics upside down – biotech is now priced below the 14.2 multiple for the Standard & Poor’s 500 for the same period.
This is a simple, powerful fact that is giving investors new confidence in the industry. You can see that in the performance of the Nasdaq Biotechnology Index, which is composed of dozens of stocks, including both industry giants and small caps.
This bellwether index broke through the critical support line of the 200-day moving average on April 11 and bottomed out three days later. From its recent low, the index has gained nearly 12%.
No Doz Opportunity No. 1 Lesson: When “The Noise” knocks down a stock or sector, look for “Signals” that tell you the investment is actually healthy. And right now, biotech is one of the best profit opportunities around.
No Doz Opportunity No. 2: Semiconductors
Sometimes completely healthy sectors sell off just because everything else is falling off. It’s absurd. So, when you see it happening, that’s your chance to buy in.
I’ve been knocking around Silicon Valley for 30 years, and right now, the semiconductor industry is as healthy as I’ve ever seen it.
Even so, when tech stocks sold off in March and April, chip shares were taken down in kind. Just look at what happened with the SPDR S&P Semiconductor ETF (NYSE: XSD) that we’ve talked about in the past.
With about four dozen stocks, XSD is an exchange-traded fund (ETF) that touches a wide swath of the semiconductor industry. Beginning on April 2, XSD lost more than 6% of its value in just seven trading sessions.
Since then, this widely watched ETF has clawed its way back – and then some. XSD recently hit an all-time high of $70.35 on an intraday basis.
Smartphones may be the main catalyst behind this semiconductor boom. While your personal experience may lead you to believe the smartphone market is mature, these devices, which use an array of chips for processing, cameras and power management, will continue to see big sales numbers for years to come.