Biotech Still Offers Triple-Digit Upside—Only If You Can Stomach the Risk

In a world where everything is so overvalued (only relative to fundamentals like P/E ratios if you follow that sort of thing), what’s left to actually buy?

Well, I’ve always found that when in doubt, you can go back to wading through the OGs of meme stocks, i.e., biotech. There’s been a lot of action lately that, to those paying attention, there are a lot of short-term quick “opportunities”.

I put that in quotes because playing biotech stocks can be very addictive if you aren’t following appropriate rules. These are essentially lottery plays, hence the title of this post. That is not to say that true opportunity doesn’t exist. But you need to keep a book-level mentality when playing them because some may not work out at all.

They are volatile and susceptible to sudden price drops if/when some products may not get the FDA approval they were waiting on, or some lawsuit comes out against their primary (or sometimes only) product.

Regardless, it is about the only thing I can see lately that I even want to play to the upside, as there are some decent patterns that look worthwhile.

I’m not recommending Regencell Bioscience Holdings Ltd (NASDAQ:) as it looks like it already made its massive move. But I wanted to show this as an example of the types of moves these biotechs have potential for.

I mentioned Aclaris Therapeutics Inc (NASDAQ:) had a great run-up the first time it broke out of the 1.50 area. I caught that ride up to the $4.00 area, and it fell all the way back down to this area.

I’m looking for a rebound attempt up to retest at least the high $3 zone. From there, it could continue or completely fall apart, but from this area, it looks like a buy.

Nice pattern and consolidation action in Viking Therapeutics (NASDAQ:) above the $26 level support. As long as support holds, this looks like it wants to turn up and could test that 50 MA on the weekly chart.

This is a true penny stock trying to break out of consolidation. As long as the consolidation yields even a decent drift up to $0.30 are, that’s a win. But there is potential for a quick pop above $0.50. Stop is below $0.13.

I really like TherapeuticsMD (NASDAQ:). It showed a bounce off lows and, while it is stalling, it looks like it is coiling up for a big move upwards.

Like BIOF, this has a chance to double and test $3.00 without skipping a beat. There is potential to test that 200 week MA up around $7 (may be down to $6.00 area by the time it gets there, though).

Summit Therapeutics (NASDAQ:) looks like it is stair-stepping its way up and just waiting to gain more traction. Sky’s the limit on this one.

You may also note that I’m not even mentioning anything about their fundamentals, cash on hand, etc. Because they don’t seem to matter in this current market and this goes doubly so for biotech companies. Only the patterns matter here. And if you play a basket of biotechs, all you need is for one to pop a few hundred percent, and it will show an overall profit, even if the rest go to zero.