As the stock market recovered in 2009 through 2011, almost every sector posted impressive gains. Those steady-as-she goes increases continued for most stocks well into 2012 and 2013, but major biotech stocks simply took off like a rocket. Many of them surged more than 100% over the past two years, creating tens of billions of dollars in profits for investors. #-ad_banner-#Leading biotechs refilled their drug pipelines (through both acquisitions and internal R&D), which set the stage for steady and solid sales growth. Thirty-nine new drugs were approved by the FDA in 2012, a rate not seen… Read More

As the stock market recovered in 2009 through 2011, almost every sector posted impressive gains. Those steady-as-she goes increases continued for most stocks well into 2012 and 2013, but major biotech stocks simply took off like a rocket. Many of them surged more than 100% over the past two years, creating tens of billions of dollars in profits for investors. #-ad_banner-#Leading biotechs refilled their drug pipelines (through both acquisitions and internal R&D), which set the stage for steady and solid sales growth. Thirty-nine new drugs were approved by the FDA in 2012, a rate not seen since the mid-1990s. That flurry of approvals helped fuel sales growth in subsequent years, even though the number of new approvals dropped to 26 in 2013, according to Goldman Sachs. Though most biotech firms have seen their growth prospects ebb and flow from year to year, few have been as steady as Celgene (Nasdaq: CELG), which continues to crank out new drugs treating various types of blood cancers (known as myelomas) and pancreatic cancer. Investors have responded, boosting its shares from $60 in the summer of 2012 to a recent $165. Expressed another way, shares traded for around 10 times… Read More

You don’t need a crystal ball to see where the U.S. economy is headed in coming years. We already know. Certain industries are poised for very good years ahead, and there’s no need to wait around for signs of their revival.  Nor do you need to spend days or weeks finding the right stocks to play such themes. Well-constructed exchange-traded funds (ETFs) have already built portfolios with all the exposure you’ll ever need. Let’s take a closer look. 1.    The Manufacturing Renaissance​ More than a year ago, I read one of the most compelling business articles… Read More

You don’t need a crystal ball to see where the U.S. economy is headed in coming years. We already know. Certain industries are poised for very good years ahead, and there’s no need to wait around for signs of their revival.  Nor do you need to spend days or weeks finding the right stocks to play such themes. Well-constructed exchange-traded funds (ETFs) have already built portfolios with all the exposure you’ll ever need. Let’s take a closer look. 1.    The Manufacturing Renaissance​ More than a year ago, I read one of the most compelling business articles written in the recent era. As the authors noted about a strategic decision by General Electric (NYSE: GE) to crank up once-dormant assembly lines here in the U.S., it simply no longer made sense to build the company’s hot water heaters in China: “A funny thing happened to the GeoSpring on the way from the cheap Chinese factory to the expensive Kentucky factory: The material cost went down. The labor required to make it went down. The quality went up. Even the energy efficiency went up. GE wasn’t just able to hold the retail sticker to the ‘China price.’ It beat that… Read More

In the three months since Alcoa (NYSE: AA) kicked off the third-quarter earnings season, much has happened:#-ad_banner-# • U.S. consumers moved further into hibernation, leading to another period of weakness for major retailers (at least those not named Amazon.com (Nasdaq: AMZN)). • The U.S. government botched a much-anticipated rollout of the Affordable Care Act, aka Obamacare. • Natural gas prices surged to multi-year highs on the back of an unusually cold winter. • Companies began picking up the pace of hiring, leading the Federal Reserve to begin tapering its stimulus program. Read More

In the three months since Alcoa (NYSE: AA) kicked off the third-quarter earnings season, much has happened:#-ad_banner-# • U.S. consumers moved further into hibernation, leading to another period of weakness for major retailers (at least those not named Amazon.com (Nasdaq: AMZN)). • The U.S. government botched a much-anticipated rollout of the Affordable Care Act, aka Obamacare. • Natural gas prices surged to multi-year highs on the back of an unusually cold winter. • Companies began picking up the pace of hiring, leading the Federal Reserve to begin tapering its stimulus program. • And the S&P 500 Index delivered a 9.8% quarterly gain, which works out to more than 35% on an annualized basis. With Alcoa set to once again kick off earnings season this week on Jan. 9, it’s time to look ahead and ponder what the quarter ahead holds for investors. Here are four key themes you should be tracking as you digest the raft of quarterly conference calls set to take place over the next month. 1. More Buybacks And Dividends One of the hallmarks of this bull market (which will hit the five-year mark in… Read More

Give credit where it’s due. Ever since China’s government pursued vigorous reforms 35 years ago, the country’s economic growth rate has been simply remarkable.#-ad_banner-# According to the World Bank, roughly half a billion Chinese people have been lifted out of poverty, and the economy is now 90 times larger than it was back in 1978.  Rumors of the imminent demise for this growth machine in recent years have been clearly premature. I noted these concerns more than two years ago, as have noted short seller Jim Chanos and others, and the Chinese economy has still managed… Read More

Give credit where it’s due. Ever since China’s government pursued vigorous reforms 35 years ago, the country’s economic growth rate has been simply remarkable.#-ad_banner-# According to the World Bank, roughly half a billion Chinese people have been lifted out of poverty, and the economy is now 90 times larger than it was back in 1978.  Rumors of the imminent demise for this growth machine in recent years have been clearly premature. I noted these concerns more than two years ago, as have noted short seller Jim Chanos and others, and the Chinese economy has still managed to grow more than 7% annually. In fact, the Chinese government believes that this economy will grow an impressive 7.5% in 2014 as well, which would still be the most impressive growth rate in the world. Trouble is, recent signs point to decelerating growth, perhaps closer to 5%, which would create a drag for the dozens of economies that consider China to be their major trading partner. The trouble spots include local government debt, an increasingly uncompetitive wage structure and a tricky set of adjustments that the government is making to shift toward domestic consumption. Document 107… Read More

Want to get rich quick? Invest in a technology IPO.#-ad_banner-#​ According to Dealogic, the average tech IPO in 2013 surged a stunning 41% in its first day of trading. The most impressive one-day gain came from Benefitfocus (Nasdaq: BNFT), which was priced at $26.50 when the deal was launched Sept. 23 and managed to close above $53. (Perhaps tellingly, shares have risen just 5% since then.) Twitter’s (NYSE: TWTR) 73% pop in its first day of trading was also quite impressive. The IPO market lifted many sectors last year, not just technology. The health care sector, led by… Read More

Want to get rich quick? Invest in a technology IPO.#-ad_banner-#​ According to Dealogic, the average tech IPO in 2013 surged a stunning 41% in its first day of trading. The most impressive one-day gain came from Benefitfocus (Nasdaq: BNFT), which was priced at $26.50 when the deal was launched Sept. 23 and managed to close above $53. (Perhaps tellingly, shares have risen just 5% since then.) Twitter’s (NYSE: TWTR) 73% pop in its first day of trading was also quite impressive. The IPO market lifted many sectors last year, not just technology. The health care sector, led by biotech stocks, generated nearly $10 billion in IPO proceeds through roughly 50 deals, according to Dealogic. More than a dozen deals in the energy sector raised nearly $10 billion.  Now that investment bankers are returning from their Caribbean villas, they’re gearing up for another banner year. According to CB Insights, there are more than 500 privately held tech companies that are believed to be already worth more than $100 million.  The 10 most anticipated IPOs of 2014 include: 1. Alibaba.com​ This Chinese e-commerce giant, which conducts more than $150 billion in transactions a year, is deciding whether… Read More

By the time the U.S. budget deficit reached $1.4 trillion in fiscal (October) 2009, alarm bells were sounding everywhere. Unless the government could get its fiscal house in order, the future promised years of misery as the U.S. kowtowed to its bondholders in China, Japan and elsewhere. But this crisis simply never came to pass. Thanks to a range of factors for which both political parties can take some credit, the budget gap has already narrowed sharply. According to the Congressional Budget Office (CBO), the budget deficit will fall even further in fiscal 2014 and 2015. A Fast-Shrinking Deficit… Read More

By the time the U.S. budget deficit reached $1.4 trillion in fiscal (October) 2009, alarm bells were sounding everywhere. Unless the government could get its fiscal house in order, the future promised years of misery as the U.S. kowtowed to its bondholders in China, Japan and elsewhere. But this crisis simply never came to pass. Thanks to a range of factors for which both political parties can take some credit, the budget gap has already narrowed sharply. According to the Congressional Budget Office (CBO), the budget deficit will fall even further in fiscal 2014 and 2015. A Fast-Shrinking Deficit In another bit of good news, the recent era of very low interest rates has enabled Uncle Sam to keep interest payments in check. Five years ago, the government was paying a roughly 4% interest rate on its debt. That figure has fallen by more than 150 basis points since then. *CBO estimate #-ad_banner-#The net result of the drop in interest rates: Uncle Sam has saved nearly $200 billion in annual interest expense (in light of the growing total debt since then and assuming interest rates had stayed constant at 2008 levels). The tougher… Read More

We are losing the battle of the bulge. Though health care practitioners have been trying to raise awareness about the perils of obesity for a decade, the numbers keep getting worse. According to a survey conducted by Gallup-Healthways, 27.2% of all Americans are classified as obese, up a full percentage point from 2012. A stunning 32.5% of people ages 45 to 64 are considered obese. Those figures go hand in hand with rising rates of diabetes and hypertension. Although investors had been pinning their hopes on obesity drugs offered by Vivus (Nasdaq: VVUS), Orexigen Therapeutics (Nasdaq: OREX) and Arena Pharmaceuticals… Read More

We are losing the battle of the bulge. Though health care practitioners have been trying to raise awareness about the perils of obesity for a decade, the numbers keep getting worse. According to a survey conducted by Gallup-Healthways, 27.2% of all Americans are classified as obese, up a full percentage point from 2012. A stunning 32.5% of people ages 45 to 64 are considered obese. Those figures go hand in hand with rising rates of diabetes and hypertension. Although investors had been pinning their hopes on obesity drugs offered by Vivus (Nasdaq: VVUS), Orexigen Therapeutics (Nasdaq: OREX) and Arena Pharmaceuticals (Nasdaq: ARNA), the fact that all three of those stocks still trade below $10 — despite many years of hype — shows that pill-based approaches have been underwhelming.#-ad_banner-# Little-known EnteroMedics (Nasdaq: ETRM) may have come up with a better approach. The company has developed an implantable device that impedes signals coming from the vagus nerve. EnteroMedics’ VBLOC (vagal blocking therapy) keeps the stomach from sending the brain a message that it’s time to eat. Though the company has already received regulatory approval in Australia and Europe, it’s the U.S. market that represents the holy grail for EnteroMedics, simply because the… Read More

Forget almost everything you learned about investing over the past few years.#-ad_banner-# The past 48 months have been characterized by sluggish U.S. economic growth, a helping hand from the Federal Reserve, global scares, and a steadily rising U.S. stock market. Yet as we head into 2014, many of these variables will no longer apply — and how you adjust to these changes can spell the difference between profits, losses or merely capital preservation. Sustainable 3% Growth? The U.S. economy surged an impressive 4.1% in the third quarter, thanks in large part to inventory restocking. That led economists to assume… Read More

Forget almost everything you learned about investing over the past few years.#-ad_banner-# The past 48 months have been characterized by sluggish U.S. economic growth, a helping hand from the Federal Reserve, global scares, and a steadily rising U.S. stock market. Yet as we head into 2014, many of these variables will no longer apply — and how you adjust to these changes can spell the difference between profits, losses or merely capital preservation. Sustainable 3% Growth? The U.S. economy surged an impressive 4.1% in the third quarter, thanks in large part to inventory restocking. That led economists to assume that fourth-quarter GDP growth would be notably weaker, especially as further inventory stocking was unlikely. Yet in recent weeks, it’s become apparent that the economy is on track for a second straight quarter of robust GDP growth. Economists at Deutsche Bank now anticipate 3.8% GDP growth in the quarter just ended (which they will revise after digesting an international trade report due Jan. 7). Two consecutive quarters of GDP growth above 3% is quite unusual. It’s happened only once in the past five years (the fourth quarter of 2011 and the first quarter of 2012). The economy subsequently rose, on… Read More

Thanks to a popular financial website, the term “alpha” has become popular over the past few years. Yet the ETF industry wants you to think a lot more about “beta.” #-ad_banner-# Dozens of new exchange-traded funds were launched in 2013 in an emerging category known as “smart beta,” and investors will be treated to many more of these ETFs in the coming year. It’s a welcome development for an industry that risked growing stale. While the term “alpha” refers to any gains an investor can reap above the broader market, beta refers to how… Read More

Thanks to a popular financial website, the term “alpha” has become popular over the past few years. Yet the ETF industry wants you to think a lot more about “beta.” #-ad_banner-# Dozens of new exchange-traded funds were launched in 2013 in an emerging category known as “smart beta,” and investors will be treated to many more of these ETFs in the coming year. It’s a welcome development for an industry that risked growing stale. While the term “alpha” refers to any gains an investor can reap above the broader market, beta refers to how a stock or fund should be expected to perform relative to a given benchmark. In recent years, investors have had plenty of options among ETFs that can be expected to trade in a predictable fashion. From S&P 500 index funds to technology funds to high-yield bond funds, these passively managed ETFs are a great way to provide predictable exposure at a very low cost. These ETFs have emerged as great values, especially in relation to higher-cost actively managed mutual funds, which can carry expense ratios exceeding 2%. Now, this new class of smart-beta ETFs — which also go by terms… Read More

Although almost any market action can be explained away — in hindsight — some trends will remain a deep mystery.#-ad_banner-#​ Major biotech stocks rallied sharply throughout 2013, as I noted in this column, but smaller biotechs inexplicably sold off sharply after Labor Day. My view: In the absence of any clear explanation of why smaller biotechs should suddenly fall deeply out of favor, lower stock prices should lead investors to give these stocks a fresh look. Indeed, that scenario played out as expected. Since my mid-November profile of Regulus Therapeutics (Nasdaq: RGLSD), Threshold Phama (Nasdaq: THLD) and Synergy… Read More

Although almost any market action can be explained away — in hindsight — some trends will remain a deep mystery.#-ad_banner-#​ Major biotech stocks rallied sharply throughout 2013, as I noted in this column, but smaller biotechs inexplicably sold off sharply after Labor Day. My view: In the absence of any clear explanation of why smaller biotechs should suddenly fall deeply out of favor, lower stock prices should lead investors to give these stocks a fresh look. Indeed, that scenario played out as expected. Since my mid-November profile of Regulus Therapeutics (Nasdaq: RGLSD), Threshold Phama (Nasdaq: THLD) and Synergy Pharma (Nasdaq: SGYP), these three stocks have rebounded, 24%, 12% and 31% respectively. That’s an impressive six-week rally, and likely signals that this out-of-favor sector is rotating back into favor. I think these three stocks remain undervalued and will be tracking them in the year ahead. With that in mind, here are three other biotechs that have massive potential upside, according to the Wall Street analysts who follow them. 1. Esperion Therapeutics (Nasdaq: ESPR )​ This firm is developing a new drug, ETC-1002, that has shown great promise in treating people with high cholesterol for whom statins have not been helpful or have had problematic… Read More