Finding the best biotech companies to invest in can be tricky as volatility often pockmarks the space. Clinical plans don’t always come to fruition and sometimes biotech stocks can suffer at the hands of regulatory decisions from the Food and Drug Administration.
But the best biotech companies to invest in tend to have a commonality: A strong streak of earnings growth. As of June 2018, Investor’s Business Daily’s MarketSmith.com has two biotech stocks among a 150-strong list of the fastest growing stocks.
Near the top of the list of fastest growing stocks, Supernus Pharmaceuticals (SUPN) is ranked eighth. Over the past five years, its earnings per share have grown a massive 147%, compared to 319% for the top-earning stock, Momo (MOMO), a Chinese social media firm.
Supernus has made a name for itself among biotech stocks. Though in terms of market cap it still trails bigger biotech companies like Amgen (AMGN), Gilead Sciences (GILD), Biogen (BIIB) and Celgene (CELG). But Supernus lands itself on the list of best biotech companies to invest in for strong metrics.
It has several years of double-digit quarterly sales growth with drugs that help disorders of the central nervous system. Among those, Supernus counts epilepsy drugs Oxtellar XR (extended-release) and Trokendi XR.
Trokendi XR is also approved to prevent migraines. It rivals drugs like Botox from Allergan (AGN) and Amgen’s Aimovig.
Ligand Pharmaceuticals (LGND) is unique among biotech stocks. Though IBD ranks it No. 144 out of 150 of the fastest growing stocks — landing it a place among the best biotech companies to invest in — it doesn’t market a single drug.
Instead, Ligand acquires early-stage technologies necessary for drug development. It then licenses these platforms out to pharmaceutical companies like Dow Jones stocks Merck (MRK) and Pfizer (PFE). As of June 2018, Ligand has a year of both double-digit sales and earnings growth under its belt.
Ligand and Supernus both have IBD Composite Ratings of 99, meaning they perform in the top 1% of all stocks in terms of key growth metrics. The duo leads all other biotech stocks in terms of CR.