Considering a Few Small-Cap Biotech Plays
Biotech may be the most difficult sector in the market to invest in. The complications of coming up with a new product or compound, getting it through Phase I, II and III trials and all the way to federal approval is a long and arduous process. For every success, there are at least half dozen failures. Hedge funds that employ PHDs in biochemistry still have their share of clunkers. Biotech is built to drive investors crazy. For every dozen investments, expect three to four to fail, two to muddle along and be worth half what you put in two to three years down the road, two to show some minor progress and break even. Two will be substantial successes and become 2-4 baggers and if you are fortunate, one or two will produce a major discovery and/or be bought out that will make them five to 20 baggers or more.
That is why I prefer a shotgun approach to investing in this sector. The best way to invest in biotech is to spread your money around by accumulating small positions in at least a dozen firms. These companies should be focusing on interesting areas, are trading significantly below analysts' price targets, have strong and committed management and either have cash flow or enough cash on hand to get them through critical milestones. Here are a few small-cap biotech plays that meet these criteria and should be considered by aggressive investors....434 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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