Biotech Stocks for a Possible Year-End Rally

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 |  Includes: ALNY, ASTX, CEPH, IBB, IDRA, MRK, SHPG, SRLS
by: R. Scott Raynovich

Biotech stocks are in a recovery mode and poised for a Q4 rally extending to early January, according to Raynoreport.com's chief biotech contributor Raygent Associates.

Raygent notes that the year-end rally has been a trend in the past few years (’05,’06 and ’07 trends), though it was certainly disrupted by the recent financial crisis of ‘08/09. The IBB tracking ETF looks to be basing at levels of 75-79, so a rally would take this popular ETF beyond 80, seeking the September highs of 85.

Partnerships and good clinical news have given support to biotech stocks lately and the sentiment has improved especially with biotech financing.

Stocks with interesting potential include Cephalon (NASDAQ:CEPH), Cubist (CBST), Supergen (SUPG) and ViroPharma (VPHM).

Additional smaller cap positions that could be added are: Alnylam (NASDAQ:ALNY), a core play in RNA interference therapeutics for infectious disease and cancer; Idera (NASDAQ:IDRA), a core play in immune response therapeutics through targeted Toll Receptors for infectious and inflammatory disease; and SeraCare (NASDAQ:SRLS), a biological products and services Company in a turnaround mode with revenues growing to the $50 million range and a profitable quarter.

Disclosure: Raygent Associates, which supplied research for this article, trades actively in biotech and is long many of the stocks mentioned in this post, including IBB, CEPH, CBST, SUPG, VPHM, ALNY, IDRA, and SRLS. Currently Scott Raynovich has no position in the stocks mentioned but is looking at adding them.