Riding the Biotech Bull

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
Your biggest gainer was Bank of Ireland (IRE), which shot up 11.72%, and is now back to a BUY. 3D Systems (DDD) also announced earnings and shot up 7.59%. National Bank of Greece (NBG) rose 3.92% on news of a potential investment from billionaire contrarian investor Wilbur Ross, who also holds a big chunk of Bank of Ireland. NBG is now back to a BUY. All of your current Bull Market Alert positions are back to BUYS.


Biotech has been one of the hottest sectors in the U.S. market this year. Some of your biggest — and quickest — double and triple digit percentage gainers — have come from biotech picks like Alexion Pharmaceuticals (ALXN) and Pharmacyclics (PCYC). I expect a strong performance from your current holding Novo Nordisk A/S (NVO), which added 4.62% last week.


This week’s Bull Market Alert pick continues to bet on biotech through the ProShares Ultra Nasdaq Biotechnology (BIB). This unique exchange-traded fund (ETF) offers a broad-based and diversified bet on the U.S. biotechnology sector with a twist. Its performance corresponds to twice (2x) the daily performance of the underlying Nasdaq Biotechnology Index.


The top 10 holdings in the Nasdaq Biotech index include some familiar names, including:


Alexion Pharmaceuticals, Inc. (ALXN) 8.19%


Amgen, Inc. (AMGN) 7.34%


Regeneron Pharmaceuticals, Inc. (REGN) 6.44%


Gilead Sciences, Inc. (GILD) 5.54%


Biogen Idec, Inc. (BIIB) 5.48%


Celgene Corporation (CELG) 5.07%


Vertex Pharmaceuticals, Inc. (VRTX) 4.64%


Perrigo Company (PRGO) 4.44%


Mylan, Inc. (MYL) 2.64%


ONYX Pharmaceuticals, Inc. (ONXX) 2.42%


As it happens, it seems like all of these stocks are on a roll. Alexion Pharmaceuticals (ALXN) surged 8% last week as it smashed earnings expectations and raised its outlook. Amgen (AMGN), Celgene (CELG), Biogen Idec (BIIB), Gilead Sciences (GILD) and Regeneron Pharmaceutical (REGN) also all topped analyst consensus views, raising their Q3 and full-year guidance. Amgen actually hit a seven-year high.


The diversified approach of an ETF also gives you an overall smoother ride, protecting you against the potential “stock assassination” Questor Pharmaceuticals (QCOR) was a victim of a few weeks ago.


But what gives this ETF its kick in a rising market is its leverage. Just look at how BIB’s leveraged performance compares to un-leveraged little brother, the iShares Nasdaq Biotechnology Index Fund (IBB), over the past six months.




As you can see, a bet on BIB made more money than IBB. But this came at the price of higher volatility. (I should disclose that IBB is also a recommendation in my monthly investment service, The Alpha Investor Letter, and is a position I hold for my clients at Global Guru Capital.)


So buy ProShares Ultra Nasdaq Biotechnology (BIB) today, and place your stop at $90.00. If you want option-style returns on the biotech sector, I recommend the $140 December call options (IBB121222C00140000) on the unleveraged iShares Nasdaq Biotechnology Index Fund (IBB).

Portfolio Update

Bank of Ireland (IRE) jumped 11.72% over the past five trading days. IRE made an abrupt upward turn through the 50-day moving average early last week from the $5 support level — which is now a proven and robust line in the sand. IRE is scheduled to report earnings on Aug. 10 and is a BUY.


National Bank of Greece SA (NBG) rose 3.92%. Some “chatter” emerged last Friday regarding a rumor that majority investor Wilbur Ross may be interested in an NBG “takeover.” Ross is also a big investor — and actually sits on the Board of Bank of Ireland (IRE). Although uncorroborated by Ross’ staff, this event sent a small shock wave through NBG’s stock price that was big enough to push it above its 50-day moving average. NBG is now a BUY.


Novo Nordisk A/S (NVO) added 4.62% last week. NVO reported the completion of several share repurchase transactions last week totaling 176,000 shares. This sent NVO’s share price soaring to hit a new 52-week high. NVO will report earnings on Aug. 9 and is a BUY.


3D Systems Corp. (DDD) popped 7.59%. DDD sent investors on a wild ride late last week after reporting mixed earnings. DDD reported an inline Q2 earnings-per-share figure of $0.27 vs. a $0.27 estimate on a revenue “miss” of $83.6 million vs. an $84.1 million estimate. Overall, the earnings report was good enough to prompt analyst firm Canaccord Wealth Management to raise its price target from $32 to $40. DDD is a BUY.


Standard Pacific Corp. (SPF) lost 3.99%. SPF also reported Q2 earnings of $0.04 matching estimates.  Revenues of $274.9 million were slightly under the estimated $283.87 million figure. SPF is a BUY.


Ross Stores Inc. (ROST) was even for the week. ROST’s one-year price history is an interesting study in reliability. Looking back over the past twelve months, ROST has been extremely respectful of the 20-day moving average. In addition, the few dips it has taken below the 20-day moving average have found staunch support at the 50-day moving average. The reliability of this price action yields good insight as to when you should reduce or add to your position going forward. ROST is scheduled to report earnings on Aug. 16 and is a BUY.

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE

previous article

I believe the 21st century will belong to China because most centuries have belonged to China." -- Niall Ferguson After this year's highly successful FreedomFest, my wife and I flew to China for several speaking engagements and an opportunity to access the second-biggest economy in the world (unless you count the European Union (EU) as one country, which would make China third, behind the United States and Europe). My wife and I first vi


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Profits Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • Intelligence Report
  • Bullseye Stock Trader

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Technical Traders Alert
  • Success Trading Group


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor