Best of the Week
Most Popular
1.Dow Stock Market Trend Forecast 2015 by Nadeem Walayat - Nadeem_Walayat
2.Gold And Silver – Forget The News. Silver $12 – 14? Gold $1,000 – 1,100? 5 - Michael_Noonan
3.A TOP Formation In Apple Inc. - Crash Condition Signal Recorded - David Harris
4.Gold Gets Safe Haven Bids But COMEX Has Stopping Power - GoldSilverWorlds
5.The Swiss 10-Year Bond Illustrates Central Banks` Flawed Monetary Policy - EconMatters
6.Exponential Explosions in Debt, the S&P, Crude Oil, Silver and Consumer Prices - DeviantInvestor
7.“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown - GoldCore
8.Is Russia Planning a Gold-Based Currency? - Marcia Christoff-Kurapovna
9.Stock Market Trend Forecast 2015 Video - Nadeem_Walayat
10.Gold GDX ETF Technical Analysis - Austin_Galt
Last 5 days
Subprime Rising - U.S. Debt Breaking Bad Part 2 - 1st Mar 15
Gold CoT Improving, But ... - 1st Mar 15
UK General Election 2015 Seats Forecast - Who Will Win? - 28th Feb 15
UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - 28th Feb 15
Stocks Bull Market Continues - 28th Feb 15
U.S. Debt Breaking Bad - 28th Feb 15
NATO Frankenstein - When Centralization Scales Beyond Our Control - 28th Feb 15
Gold And Silver Insanity Prevails; Precious Metals Without Direction - 28th Feb 15
Fed Raising U.S. Interest Rates - Shovelin’ Schmitt Against the Tide - 28th Feb 15
Don't Let This Stock Market Myth Cost You Your Gains - 28th Feb 15
Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - 28th Feb 15
Stock Market Indexes Creeping Towards the Edge - 28th Feb 15
GGD Going for Mexican Gold - 27th Feb 15
Foreign Real Estate Is the New Swiss Bank Account - 27th Feb 15
10 Reasons Washington Has War Fever - 27th Feb 15
Gold and the Euro Tragedy, Iraq 3.0, Ukraine Conflict Three Ring Circus - 27th Feb 15
Deepak Chopra - New Age Genius or Bullshit Expert? - Video - 27th Feb 15 - Videos
New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - 27th Feb 15
Will Month Long Stocks Rally Continue? - 27th Feb 15
The Only Public Hedge Fund You Should Own - 27th Feb 15
UK House Prices Trend 2015 and the May General Election - 27th Feb 15
Why America is Ungovernable - The Republicans’ Civil War - 27th Feb 15
Gold vs Gold Stocks: Bullish Anomaly Developing? - 27th Feb 15
I Heart Capitalism, Nasdaq Stocks, Then And Now - 27th Feb 15
The Fed’s History of Assassination - 27th Feb 15 i
Gold Bull Market Forecast - Money Will Rotate Into These Dead Investments - 27th Feb 15
"Audit the Fed"? We've Already Done That (Well, Kind of) - 26th Feb 15
Forget Peak Oil; Worry About Peak Demand - 26th Feb 15
Currency Wars, Again - 26th Feb 15
The Fed Waited Too Long: Here Comes Inflation - 26th Feb 15
Investing Inertia Won’t Keep Your Cash Safe - 26th Feb 15
The Net Neutrality Scam - 26th Feb 15
Will Conservatives Out of Control Immigration Crisis Boost UKIP Election 2015 Prospects? - 26th Feb 15
EU Warns Ireland and Euro Zone of Debt Dangers - 26th Feb 15
Commodity Prices Set To Plunge Below 2008 Lows - 26th Feb 15
Ukraine Hyperinflation as Currency Plunges 44% in One Week! - 26th Feb 15
The State of the Global Markets 2015 - 53 Page Report - 26th Feb 15
NASDAQ New 15 Year High - Stock Market Death By Overdose - 25th Feb 15
12 Reasons Why Barry Ritholtz and Many UK Experts Are Mistaken On Gold - 25th Feb 15
Sugar Commodity Price To Sweeten Up - 25th Feb 15
Investor Profits from China 2,000-Year Unstoppable Trends - 25th Feb 15
How to Borrow Cheaply from a Government-Owned Bank - 25th Feb 15
Debt Be Not Proud - 25th Feb 15
Liberal Democrat Election Blood Bath - Could Nick Clegg Lose Sheffield Hallam? - 25th Feb 15
Wheat Commodity Price Technical Trend Forecast - 24th Feb 15
Bitcoin Price Might Stay below $250 - 24th Feb 15
Another Important Stock Market Inflection Point Approaching - 24th Feb 15
Gold: The Good, Bad, and Truly Ugly - 24th Feb 15
Eurozone Gold Holdings Increase to 10,792 Tonnes As “Reserve of Safety” Amidst Crisis - 24th Feb 15
Bird Doo; Yellen Goes to Congress - 24th Feb 15
Is Gold Investing Risk Free? - 24th Feb 15
The Bull Case For Gold Price 2015, and the Bear - 24th Feb 15
Europe - The Intersection of Three Crises - 24th Feb 15
Gold Price Just Needs More Time - 24th Feb 15
Gold Price Downtrend Looks Set to Continue - 23rd Feb
Silver Price Depressing Downtrend Will Eventually End - 23rd Feb 15
5 Reasons Why You Should Sell Amazon Stock - 23rd Feb 15
Global System Catastrophe Is Key Threat To Human Civilisation - 23rd Feb 15
Greece Crisis Yields Ideal Market Opportunities - 23rd Feb 15
Gold and Silver Stocks or General Stock Market Indices? - 23rd Feb 15
Swimming With Sharks: Goldman Sachs, Schools and Capital Appreciation Bonds - 23rd Feb 15
Stock Market - The Fed Still Has Your Back - 23rd Feb 15
Soybean Commodity Price Technical Outlook - 23rd Feb 15
Gold Weekly COTs and More - 23rd Feb 15
Stock Market New Highs With Weak Breadth - 23rd Feb 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The State of the Global Markets 2015

The Picks and Shovels of Biotech Investing

Companies / BioTech Feb 27, 2013 - 01:38 PM GMT

By: Investment_U

Companies

Marc Lichtenfeld writes: Yesterday marked the 184th birthday of an iconic American businessman – Levi Strauss

My wife worked for Levi Strauss & Co. many years ago. They were a terrific company, with a strong commitment to product quality, their employees and their community. I was so impressed that I remain loyal and almost exclusively buy Levi’s when I need a pair of jeans.


As you may be aware, Levi Strauss struck it rich in the California gold rush. But he wasn’t one of the poor saps wading through the river hoping to find a giant gold nugget. Rather, he sold durable pants to the poor saps.

When Levi Strauss died in 1902, his estate was worth approximately $6 million – roughly $160 million in today’s dollars – likely more than any gold prospector.

His family is now worth many billions of dollars.

Picks, Shovels… and Jeans
Few of the miners actually made any money. The big profits came from people like Strauss who sold the prospectors the tools they needed – the picks, shovels and jeans.

Biotech can be a similarly treacherous field. Great fortunes have been made by investors who metaphorically found gold in the river and picked the right biotech stock. Early shareholders of Amgen (Nasdaq: AMGN), Celgene (Nasdaq: CELG) and Biogen (Nasdaq: BIIB) have enjoyed huge profits as their investments have climbed from penny stock status to blue chips near or above $100 per share.

And there are plenty of exciting and promising small cap biotech stocks out there. Some have made incredible advances against difficult-to-treat diseases. Hopefully, in the near future, shareholders will be rewarded as patients’ lives are improved.

Though I recommend biotech stocks, an area that I really love is the companies that provide the “picks, shovels and Levi’s” to the drug and biotech companies. The companies that sell the tools necessary to conduct research make money regardless of whether the drug is successful.

A Few Examples
Most of these companies are profitable, with positive cash flow. That contrasts with some of the small cap biotech companies that don’t even have revenue yet. These “picks and shovels” companies are a way to play the biotech space while still investing in a real business.

For example, Qiagen (Nasdaq: QGEN) has over 500 products ranging from instrumentation kits to DNA cloning systems.

In 2012, it made $1.25 billion in profits or $1.08 per share. It generated $245 million in cash from operations.

Sigma-Aldrich (Nasdaq: SIAL) has 1.3 million customers around the world serving them with 187,000 products like organic chemicals, proteins and human cell lines.

Sigma-Aldrich generates over half a billion in cash flow and $2.6 billion in revenue.

Then there are the DNA sequencing companies like Illumina (Nasdaq: ILMN) and Life Technologies (Nasdaq: LIFE). The companies provide the machines that read DNA. Right now we’re only able to analyze a small fraction of the data that can be collected.

It is expected that within 10 years, every cancer patient will have the DNA from his or her tumor sequenced. Think about how much more knowledge we’ll have about cancer if we’re able to read and understand the DNA from every cancer tumor. Breakthroughs like that are what will likely lead to more effective medicines or perhaps someday even a cure.

Both companies are profitable.

Waters Corp. (NYSE: WAT) also has a wide range of products including peptide separation technologies, metabolite identification systems and even software for analyzing herbal medicines.

Waters generated $1.8 billion in sales in 2012 and nearly half a billion in profit.

There are many ways to strike it rich in the biotech sector. You can get lucky and invest in a small cap company that becomes the next Biogen, or you can act like Levi Strauss and make your money by supplying the speculators with the tools they need.

If you want to invest in a booming sector fueled by an aging population that will demand new therapies, yet be sure your money is going into a business and not a lottery ticket, look at the medical tools and services companies.

If Levi Strauss were alive today, I bet he’d be supplying the biotech sector with innovative gear like he did to the gold miners 150 years ago. Strauss not only made a successful product, he created a template for how to make a fortune off others’ speculation.

Good Investing,

Marc

Editor’s Note: Four years in the making, Marc is finally ready to pull the trigger on what he thinks could be one of his most profitable trades to date. We’re talking about one of, if not, the greatest advancement in medicine in the past 150 years. It will completely change the way new drugs are discovered and even created – along with the lives of early investors.

For the full story on this incredible breakthrough Marc calls “Cures on Demand,” click here.

Source : http://www.investmentu.com/2013/February/the-picks-and-shovels-and-levis-of-biotech.html

Editor’s Note: But what if you don’t have the time to put together a stock watchlist for yourself, or don’t even know where to look? That’s where The Oxford Club comes in. We’ll do the work for you, showing you what stocks to buy and when to buy them. Not only that, the Club offers something for every investor – from stock market newcomers to seasoned veterans – and provides ample opportunity to diversify through several model portfolios. Take a look at the full list of benefits that you’ll receive when you become a member of The Oxford Club.

Copyright © 1999 - 2013 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014