Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
Greece Debt Crisis to Trigger Euro-zone Credit Freeze, Expiry of Greek Euro Bank Notes - 7th July 15
SPX Sinking Premarket - 7th July 15
Marc Faber Warns: “Wake Up, People Of The World! Greece Will Come To You …Very Soon” - 7th July 15
The Greek Vote and the EU Miscalculation - 7th July 15
SPX Stocks Index Still on a Sell Signal - 7th July 15
Bill Gross on Greece: 'We're in the Eye of the Hurricane' - 7th July 15
Dow Stocks Bear Market Underway - 6th July 15
Marc Faber Warns of Greece Crisis Contagion Very High Risk - 6th July 15
Greece to Print Counterfeit Euros or IOUs, Hyper-Inflation Beckons - 6th July 15
Stock Market, Investing Big Picture - 6th July 15
“Oxi!” - Greeks Defy EU As Varoufakis Resigns To Ease Tensions With “Partners” - 6th July 15
Stock Market Rally in a Downtrend? - 6th July 15
Silver Price Consolidating Ahead of Another Sharp Drop - 6th July 15
Gold Price Gravitating Lower Towards $1000 - 6th July 15
Syriza Convinces Greece to Commit Suicide, GrExit Beckons, Market Reaction - 6th July 15
Financial and Commodity Markets Become Scary: Crash Point Or Turning Point - 5th July 15
A Revolutionary Pope Calls for Rethinking the Outdated Criteria That Rule the World - 5th July 15
Forget 'Haircut', Instead Syriza Plans Beheading of Greek Bank Depositors, Theft of Deposits - 5th July 15
The Pentagon’s 2015 Strategy For Ruling the World Through Endless War - 5th July 15
United States Celebrates the Disastrous Secession From Great Britain - 5th July 15
Greece Referendum Vote Result Forecast Yes Win, But Depression Will Continue - 5th July 15
The Great Greek Economic Depression - 4th July 15
Happy 4th of July Stock Market Analysis - 4th July 15
The Most Pressing Reason Yet You Want to Avoid Investing in Retail Stocks - 4th July 15
Fed’s Full Normalization and the Stock Market - 3rd July 15
The U.S. Dollar's 2014-2015 Rally: Wave 3 in Action - 3rd July 15
Stock Market Where are we? And where are we Going? - 3rd July 15
Xi’s Anti-Corruption Campaign Is Key to China’s Prospects - 3rd July 15
How the New Iranian Nuclear Deal Will Impact Crude Oil - 3rd July 15
China's Stock Market Rollercoaster Ride Continues - 3rd July 15
Gold Stocks Cheap to Buy but Not for Long - 3rd July 15
Capital Controls and a Bank Holiday in Greece… Here’s How You Can Profit - 3rd July 15
Greece's Varoufakis: I will Resign if there's a 'Yes' Vote - 2nd July 15
The Student Loan Bubble: Gambling with America’s Future - 2nd July 15
Inflation Is Lurking, but This Asset Can Protect You - 2nd July 15
Three Total Wealth Stock Investor Tactics You’ll Need Because Greece Isn’t Over - 2nd July 15
Why This $5.6 Trillion Investor Profit Boom Is Set To Take Off - 2nd July 15
Greek Debt Crisis: "Too late to prepare now" - Video - 2nd July 15
Guaranteed US Dollar Death Dynamics - 2nd July 15
The Greek Stress Test & The Reality Of Incremental Changes - 2nd July 15
Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros! - 2nd July 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

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

Biggest Debt Bomb in History