The medical sector is growing rapidly and getting in on the ground floor with med tech can be highly profitable for smart investors, but how can you know which stocks to choose? In many cases, the best way to track leading med-tech stocks is by looking at larger health trends. Weight loss, pharmaceutical development, and medical equipment manufacturers all stand out as top picks.
Weighing In On Weight Loss
At a time when about one-third of the global population is overweight of obese, it’s no surprise that weight loss stocks are good investments. This is especially true since being significantly overweight increases many other health risks, including the likelihood of heart disease, diabetes, and many types of cancer.
In order to combat these risks, people are turning to solutions ranging from taking herbal supplements to receiving hCG injections in an attempt to stave off future disease, and the medically-informed companies behind these strategies are profiting.
Medifast Inc, for example, has caught the attention of 11 hedge funds due to its weight loss-oriented portfolio (the company has four major distribution channels and also produces the popular Owings-Mills meal replacements, hydration products, and vitamins). The same is true of the more well-known NutriSystem brand, with 23 hedge funds taking long positions on the stock. Weight loss brands have undeniable profit potential.
Rare But Reliable
For many years, rare diseases got little to no medical attention – with few sufferers, these diseases simply didn’t have the political or financial pull to push drug development forward, so companies often abandoned them. Such illnesses and their associated drugs even came to be known as “orphans” for this reason. Now, however, social media has helped sufferers band together, pushing companies to develop treatment regimens for rare conditions, which is how Sarepta Therapeutics gained the public eye.
Sarepta Therapeutics recently received the first FDA approval in history for a Duchenne muscular dystrophy (DRD) drug. About 13 percent of DRD patients have the particular mutation this drug is meant to address, but although the market is narrow, investors are responding. Immediately following the FDA approval, Sarepta’s stock price rose more than 80 percent. It’s not too late to get in on this groundbreaking company’s stock, either.
Biopharmaceuticals Go Big
Biologics and biopharmaceuticals are big business today, as the medical industry realizes that the best way to treat many diseases is by drawing on our own biological systems. In this category are blood products, proteins engineered from the human genome, and other similar products. One of the most powerful developments in the biopharmaceutical industry is immunotherapy, which can be used to treat cancers, as well as autoimmune diseases.
Kite Pharma has been working on developing and launching a form of immunotherapy that treats lymphomas, but as their current products are still in phases 1 and 2 of clinical trials, the stock is trading fairly low. Keep an eye on this company as they approach an FDA approval, however, as this could lead to significant price jump, as seen with Sarepta.
Finally, if you’re looking for a highly diverse, innovative medical sector, consider investing in medical device development. Medical device companies include those developing traditional hospital monitors and surgical tools as well as those engineering nearly invisible data collection tools.
Among the former, NxStage Medical is a standout stock. The company designs hemodialysis machines that can be used to prolong the lives of patients with renal disease. After beating third quarter expectations this year, investors are feeling confident about the company’s 2017 potential. Invest now for strong payout potential.
On the other end of the med tech spectrum are companies like G-Tech Medical that make tools for managing gastrointestinal diseases like Crohn’s and ulcerative colitis. Though this company is not yet being traded publically, they recently raised $1.5 million in growth capital through the Propel(x) platform. Keep an eye on this company; whether a larger biotech brand acquires them or they go public, they’ve already built a powerful business.
The biomedical industry is expansive and offers a great way to diversify your portfolio. Whether your interests run towards the pharmaceutical or the mechanical, there’s a hot stock (or five) out there for you.