At the end of 2018, the Federal Reserve told the market the water was warm, come in for a swim.
The market was happy to oblige. In fact, the S&P 500 has rebounded almost 11% to start 2019, nearly erasing all of the losses from December.
It’s as if the sell-off never happened.
Never mind slowing GDP growth, and never mind an earnings recession.
These are temporary problems that investors can look past, knowing the central bank is firmly ensconced on the sidelines.
But going forward, it’s fair for investors to wonder if all the easy money has already been made.
Don’t worry. Right now, this market is a stock picker’s dream.
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The major indexes will likely face major resistance going forward, but certain individual stocks are poised for big gains.
But how do you determine which stocks are poised for market-beating returns this year?
In fact, in just the last two weeks, certain biotech stocks identified by the VQScore have outperformed the market by three or four times.
I wrote about those stocks here.
While the S&P 500 is up around 1% since that article was published, two of the three stocks mentioned are up almost 5%.
The run for biotech stocks has just begun, and not only for the three stocks I previously showed you.
The VQScore has found two more biotech stocks that just received our highest rating.
Here are the details on these two biotech stocks to buy now…
Biotech Stocks to Buy in 2019, No. 2
The first stock I have for you today is Biogen Inc. (NASDAQ: BIIB). The VQScore loves BIIB stock, and for good reason.
The company is set to make $28.67 per share in 2019, representing almost 10% growth over 2018 earnings of $26.24.
Many on Wall Street expect an earnings recession in 2019. But not for Biogen.
Both sales and revenue are expected to grow this year.
Plus, investors can buy that growth for only 11 times 2019 expected earnings.
That’s super cheap compared to the market average multiple for the S&P 500.
If earnings exceed expectations, shares of Biogen should easily exceed its 2018 high of $350 per share. Right now, shares trade just below $324.
If earnings growth and multiple expansion aren’t enough to propel the stock in 2019, the company has already committed another $3.5 billion to buy back shares.
That’s almost 5% of Biogen’s current market capitalization.
Compared to the rest of the market, Biogen is a stock picker’s dream.
Biotech Stocks to Buy in 2019, No. 1
The top pick today is Gilead Sciences Inc. (NASDAQ: GILD), which has dropped 16% from its 2018 peak.
That might make sense if there were some sort of expected earnings decline, but that is not the case here.
Analysts expect Gilead to post nearly the exact same earnings in 2019 as was earned in 2018.
While shares of Gilead have recovered some of their losses from the correction selling in the market at the end of the year, the stock has stalled of late.
The latest setback was a late-stage trial failure of a liver disease drug that investors had hoped would fuel future growth.
Such is life in the biotech space.
Drugs come and go with some frequency, meaning there will be excitement and disappointment along the way.
Owning Gilead today, though, is more about valuation metrics. That’s why shares are so highly rated by our VQScore system.
At current prices, shares of Gilead trade for less than 10 times last year’s earnings. And while profits will be flat in 2019, revenue is still inching higher.
The stability of both earnings and revenue means the company can pay a healthy dividend to investors. That dividend sits at just under 4% today.
Add it all up, and Gilead shares are cheap relative to the market multiple.
Profits are stable, and while investors wait for shares to appreciate, they can collect a yield that is nearly double current Treasury rates.
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