If you're looking to double your money, the biotech sector is one of the best hunting grounds that you'll find.
So far this year, for instance, the iShares NASDAQ Biotechnology Index (NASDAQ: IBB) - an ETF that's a great proxy for the sector - has zoomed 28.2%, more than double the 13.59% SPDR S&P 500 Index ETF (NYSEArca: SPY). The IBB gained 31% last year.
And a lot of individual biotech stocks have actually doubled, tripled or more - the Holy-Grail type of gains that high-tech investors crave.
But there's a problem.
You see, not all biotech stocks are created equal.
It can take 10 years and $1 billion or more to take a new drug from the lab, run it through FDA testing, and get it approved for use in the marketplace.
Each of those steps along that journey poses a risk of delay, rejection or outright failure. And bad news in a high-growth stock can ignite a 40%, 60% or even 80% drop in the price of your stock - savaging your savings or retirement in the process.
But there's a way around this: A strategy that can avoid some of the biotech sector's biggest risks, while giving you access to the high growth and high returns. And one that still gives us the chance to find double-your-money stocks - the chief objective of the Five Tech-Wealth-Investing Rules that I've introduced you to in recent weeks.
Those rules are the basis of the stock I've selected for you today.
With a market value of $275 million, the company I'm recommending today is a small-cap play - and affords us the double-your-money potential of small-market plays. But because this company is more of an indirect play on the biotech sector (it provides the high-value ingredients that other firms need to have as they develop their own biological compounds), it gives us the best of both worlds: We get the high-growth rates of biotech, even as we sidestep the typical risks faced by companies that have to pursue drug approvals through the FDA.
We call this kind of stock a "pick-and-shovel play." The company is Repligen Corp. (NasdaqGS: RGEN). And believe me when I tell you that you'd be hard-pressed to find a better candidate than this small-cap leader.
Repligen is a leading provider of a substance known as "Protein A" - which is used to produce several leading drugs. For instance, it's used to separate and purify disease-fighters known as "monoclonal antibodies."
This is a complex field of science. So, let me break it down a bit for you.
Protein A comes from bacteria that live in human respiratory tracts and on the skin. Repligen uses this protein because it has novel qualities that help it bind to antibodies.
In turn, these are called "monoclonals" because they are replicated as exact clones of specific antibodies needed to help fight disease. By cloning different antibodies, scientists can create drugs that target a wide range of conditions.
This unique approach gives Repligen access to some of the most important drugs on the market today. And it places the firm squarely in a large and growing market.
We're talking about a segment of the drug industry known as "biologics" because they're derived from the cells of mammals. In 2010, the last year for which good data was available, there were nearly 1,000 clinical trials under way in this field.
The sector includes protein-based drugs like monoclonal antibodies and vaccines. Analysts predict the biologics market will nearly double in sales to roughly $240 billion by the end of this decade.
A full third of that total will go to monoclonals.
And that's good news for Repligen and its shareholders. Already, the firm is a supplier for such leading drugs as:
The stock trades at slightly less than $9 a share. But I believe it can easily double in price.
Let me show you how by running the stock through the five "filters" that make up my tech-investing strategy.
We have one more thing going for us with this stock - a potential catalyst that a lot of Wall Street players aren't considering.
I'm talking about Repligen's low stock price - of less than $10 a share.
A large number of institutions - either by choice, or as defined by their investment charter - won't touch a stock under $10 ... no matter how alluring the company's potential might be.
But once the stock hits that $10 "trigger point" - meaning it's become "institutional grade" - expect to see a large number of sell-siders "initiate coverage" or issue "upgrades" to their ratings. Although we never follow Wall Street's lead, we're always happy to see them deliver liquidity to a stock that we've already recommended, and that you've had the opportunity to buy.
This new institutional support will turbocharge the rally, and could ignite a much-stronger-than-expected updraft in Repligen's stock price.
For investors looking to magnify their personal net worth, this is the kind of stock you dream of finding - an undiscovered small-cap in a high-growth business... and that can double your investment in surprisingly short order.
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About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.