It's the biggest bull market in the country... And no one is talking about it.
Dozens of individual names in the sector have doubled or more in the last 12 months. A simple fund of these stocks is up more than 40%. It's been hitting new highs almost every day for the last two weeks.
It's a "stealth" bull market in biotech.
Regular readers know the biotech sector shares many characteristics with the resource sector...
Like mining-exploration firms, many biotechs burn through cash in search of the "next big thing." When a firm strikes it rich, the returns can easily go into the thousands of percent. For this reason, both sectors tend to draw in "hot money" every few years and go through speculative booms. Folks just love to chase stories about miracle cures and magic pills.
And right now, biotech is booming. The biggest biotech fund,
iShares Nasdaq Biotechnology Index Fund (IBB) (
NASDAQ: IBB,
Stock Forum) , is up about 130% from its August 2011 low... and more than 60% since
we showed you a new uptrend here last summer. The
double-long biotech fund (BIB) we mentioned back in July is up nearly 20% since then.
Over the last 12 months, biotech is the market's top-performing sector.
These stocks are moving higher in part because of increased demand from Big Pharma. Large drugmakers need to restock their pipelines with new products. And they're buying up tiny biotechs to get access to their drugs.
Late last month, for example,
major biotech firm Amgen announced it would spend more than $10 billion to buy cancer-drug maker Onyx. It's one of the top five biggest biotech takeovers ever. And we expect to see more deals like it in the months and years ahead.
This month, a report from accounting firm PriceWaterhouseCoopers noted that venture-capital funding in the biotech sector was up 68% in the second quarter, compared with the same period last year.
And over the last 20 months, demand for IBB has soared. Shares outstanding are up 45%.
The hot money is moving in.
Despite the recent gains... and despite the powerful fundamental backstory driving the gains, you're still not reading about the biotech bull market on the covers of investment magazines. They're not talking about it on CNBC. It's relatively unknown to the investing public. Folks aren't talking about their biotech stocks at cocktail parties.
Biotech is volatile. It's going to be a bumpy road higher. But until you see biotech on the covers of magazines and headlining the newspapers, this bull market is still in "stealth" mode... and it still has plenty of room to run. Stay long.