Todd Shriber


These biotech ETFs are flourishing this year and some could be future winners with or without Covid-19.

The fight against the novel coronavirus sparked serious upside for an array of healthcare assets this year, including biotech-focused exchange traded funds. Point in case, the widely followed Nasdaq Biotechnology Index is higher by 11.50% year-to-date.

Some biotechnology ETFs are performing better than that, partly due to heavier allocations in the likes of Moderna (NASDAQ:MRNA), BioNTech (NASDAQ:BNTX) and Inovio Pharmaceuticals (NASDAQ:INO), among other Covid-19 vaccine competitors.

Beyond Covid-19, investors are drawn to biotech because this is one of the most innovative corners of the broader healthcare sector, and that innovation fuels big growth. Per Morningstar:

“We project 4.7% annual average sales growth through 2024 (similar to consensus) for the 18 moatiest pharma and biotech names we cover, as innovation more than counters generic/biosimilar and branded competitive threats.”

Investors looking to profit from that growth should consider these 7 biotech ETFs to buy now for Covid-19 and beyond:

Biotech ETFs to Buy: SPDR S&P Biotech ETF (XBI)

Source: Shutterstock

Expense ratio: 0.35% per year, or $35 on a $10,000 investment

TheSPDR S&P Biotech ETF is one of the legacy funds in the biotech ETF category, and one of the largest at that. Up about 15% year-to-date, it’s again displaying the advantages of its equal-weight methodology, which tilts the fund toward smaller and mid-cap stocks. Compare this to the aforementioned Nasdaq Biotechnology Index, which is cap-weighted and leans heavily on large-cap stocks.

XBI holds 113 stocks with a weighted average market capitalization of $10.33 billion, put the fund in mid-cap territory. More relevant to the current environment, XBI is a credible coronavirus play as at least four of its top 10 holdings, including Inovio and Moderna, are working on Covid-19 vaccines. Plus, there’s earnings growth to be had here.

“In the wake of massive downside growth for the broader market, as shown above, 2020 earnings growth is projected to remain positive for biotech relative to the S&P 500 (1% vs. -20.5%) with the 3–5-year outlook nearly double the market rate (19% vs. 10%),” according to State Street Global Advisors.

ARK Genomic Revolution ETF (ARKG)

Source: Shutterstock

Expense ratio: 0.75% per year

It’s easy to get wrapped up in the 60.20% 2020 gain posted by the ARK Genomic Revolution ETF and say this is the ultimate ETF for a coronavirus play. However, that would diminish an important fact: ARKG has been trouncing traditional healthcare and biotech ETFs for years, long before Covid-19 was part of the everyday lexicon.

Yes, there are intersections between genomics and the quest to vanquish the virus and yes, some ARKG components are engaged in that fight. However, the fact of the matter is genomics is a booming industry with or without a pandemic and ARKG is one of the biotech ETFs best positioned to thrive after the coronavirus is defeated.

“Over the last five years, we have passed key inflection points in the ability to access, manipulate, and understand the molecular building blocks of the human body,” writes ARK Director of Research Brett Winton. “The ‘genomic age’ of medicine promises profound ramifications for human health and for the companies involved, among them: (i) tool providers that enable basic research, sharpen the precision of diagnostics, and guide personalized medicine; (ii) diagnostic platforms deploying data that informs the treatment of disease; (iii) and other companies deploying technology and data to create next-generation treatments and cures.”

The fund is actively managed, hence the high fee relative to rivals, but ARKG has proved it’s worth paying up for.

ALPS Medical Breakthroughs ETF (SBIO)

Source: Shutterstock

Expense ratio: 0.50% per year

The ALPS Medical Breakthroughs ETF isn’t heavy on coronavirus fighters, but it’s highly relevant in the current biotech environment and beyond. The pandemic is placing added emphasis on later stage clinical trials — good for SBIO as all of its components have drugs or therapies that are in Phase 2 or Phase 3 trials.

Likewise, smaller biotech companies continue flourishing. That’s a positive for SBIO as its components have market caps ranging from $200 million to $5 billion. One more relevant trait offered by SBIO: its member firms must have enough cash to survive at least 24 months at current burn rates. That’s important because developing a novel drug or treatment comes with steep costs.

About 10% of SBIO components are working on COVID-19 solutions. That’s enough to keep things interesting with this biotech ETF over the near-term, but the fund offers long-ranging potential due in large part to its immunotherapy and oncology holdings, among others.

Principal Healthcare Innovators Index ETF (BTEC)

Source: Shutterstock

Expense ratio: 0.42% per year

The Principal Healthcare Innovators Index ETF recently turned four years old. It was toiling in relative anonymity until the coronavirus came around. Now, BTEC ranks as one of this year’s best-performing healthcare ETFs, confirming it’s meaningful to count Moderna and Teladoc Health (NYSE:TDOC) among its top holdings.

BTEC, which tracks the Nasdaq Healthcare Innovators Index, isn’t a dedicated biotech ETF, but biotechnology stocks do represent a fair slice of the fund’s portfolio. Rather, as its name implies, BTEC focuses on healthcare innovators, giving it diversity across biotech, healthcare equipment and telemedicine names, just to name a few.

Translation: BTEC is a growth play. Its index methodology allots for earnings inconsistencies while emphasizing research and development-intensive companies.

Even with that, BTEC isn’t richly valued, trading at just 17.32x earnings. That’s growth at a reasonable price.

First Trust NYSE Arca Biotechnology Index Fund (FBT)

Source: Shutterstock

Expense ratio: 0.55% per year

With $2.17 billion in assets under management, the First Trust NYSE Arca Biotechnology Index Fund is one of the largest biotech ETFs. It features an equal-weight mix of 30 stocks and is higher by 11.44% year-to-date.

That’s an admirable performance considering the fund isn’t heavily allocated to Covid-19 vaccine developers. FBT doesn’t hold shares of Moderna and its biggest coronavirus holding is a just-over 3% allocation to Gilead Sciences (NASDAQ:GILD).

Lack of coronavirus vaccine exposure isn’t a knock on FBT though. While it may be a near-term hurdle of sorts, the fund is levered to other exciting biotech themes, including genomics, liposome technology and oncology. Additionally, this fund has an extensive history of topping cap-weighted rivals.

Loncar Cancer Immunotherapy ETF (CNCR)

Source: CI Photos /

Expense ratio: 0.79% per year

The Loncar Cancer Immunotherapy ETF focuses on firms making or engaged in clinical trials for cancer immunotherapy drugs. In a normal market climate, CNCR would be a compelling idea, but this year, investors’ preference for direct coronavirus plays is working against the fund.

However, investors shouldn’t be deceived by the name because CNCR has one of the largest Moderna allocations among all ETFs.

And as is the case with some of the other funds highlighted here, CNCR offers investors compelling growth prospects despite the perception that it lacks for Covid-19 exposure.

The cancer immunotherapy market “is poised to hit around US$ 115.4 billion by 2026,” according to Accumen Research. That represents a compound annual growth rate (CAGR) of 10.6% from 2019 through 2026.

“Growing demand for cancer immunotherapy in various end user applications growing awareness about cancer treatment across the globe and multi-functionality of cancer immunotherapy are the main drivers for the market growth of the global cancer immunotherapy market over the forecast period,” according to the research firm.

ETFMG Treatments, Testing and Advancements ETF (GERM)

Source: Shutterstock

Expense ratio: 0.68% per year

Timing is of the essence with new ETFs and on that note, the ETFMG Treatments, Testing and Advancements ETF is easily one of this year’s best-timed rookie ETFs.

GERM debuted in late June and is already flirting with $73 million in assets under management. No sooner did GERM debut than there was a sizable spike Covid-19 cases across the U.S.

The GERM cause is helped by a 15% combined weight to Novavax (NASDAQ:NVAX) and Moderna as well significant exposure to makers of coronavirus diagnostics and testing equipment.

It may seem counterintuitive to say because of the time of GERM’s debut and the initial enthusiasm for the fund, but this product doesn’t need the coronavirus to be a potential winner for investors. Unfortunately, Covid-19 isn’t the first pandemic the world has dealt with it and it won’t be the last.

That’s one of the reasons the global vaccine ETF offers double-digit CAGR over the next several years. In fact, many GERM components could thrive amid future pandemics because these companies are honing research, development and testing capabilities due to Covid-19.

Author: Todd Shriber

Source: Investor Place: 7 Biotech ETFs to Buy Now For Covid-19 And Beyond

With bitcoin bouncing back, investors may want to consider these funds to participate in the resurgence.

In what feels like somewhat quiet fashion, bitcoin is enjoying an excellent start to 2020. On Jan. 1, the largest digital currency by market value resided around $7,160, but has subsequently vaulted to $9,282 as of Feb. 1.

In the world of exchange traded funds (ETFs), the bitcoin ETF remains elusive. Over the course of 2019, the Securities and Exchange Commission (SEC), as it did in prior years, consistently turned back bitcoin ETF applications. Or fund issuers pulled applications before the commission could deny them.

While some market observers believe progress is being made on a bitcoin ETF, one of the more credible efforts, that of Bitwise Asset Management, was recently yanked, though the firm said it plans to refile at a later date.

Compounding the bitcoin ETF’s woes is a recent survey of venture capitalists, participants in the cryptocurrency universe and other financial services firms indicating that it’s unlikely that a bitcoin ETF gains approval this year.

There are, however, other fund vehicles offering exposure to the premier digital asset. Here are three to consider.

Great Bitcoin Funds: Grayscale Bitcoin Trust (GBTC)

Expense ratio: 2% per year, or $200 on a $10,000 investment.

Debuting in September 2013, the Grayscale Bitcoin Trust (OTC:GBTC) has long been one of the primary fund avenues for accessing the digital currency. Currently, one GBTC share is equivalent to 0.00096772 bitcoin, according to issuer data.

“Grayscale Bitcoin Trust is a traditional investment vehicle with shares titled in the investor’s name, providing a familiar structure for financial and tax advisors and easy transferability to beneficiaries under estate laws,” according to Grayscale.

GBTC recently became officially registered with the SEC. That’s a positive for investors and could have more meaningful implications going forward.

GBTC “is solely and passively invested in Bitcoin, enabling investors to gain exposure to Bitcoin in the form of a security while avoiding the challenges of buying, storing, and safekeeping Bitcoin directly. Now, it is also the first digital currency investment vehicle to attain the status of an SEC reporting company,” said New York-based Grayscale in a statement.

ARK Next Generation Internet ETF (ARKW)

Expense ratio: 0.75%

Prior bitcoin’s late 2018 implosion, the ARK Next Generation Internet ETF (CBOE:ARKW) held a sizable stake in the aforementioned GBTC, but ARK Invest’s management had the foresight to pare that position before the digital asset tumbled.

Today, GBTC is one of the ARK ETF’s 42 holdings, representing just 1.86% of the fund’s weight. ARKW is, however, actively managed so it’s not constrained by an index and can adjust its bitcoin exposure as its managers see fit.

“As an open, neutral, and permissionless global monetary system with no reliance on the State, bitcoin is in a good position to win this battle,” said ARK in a recent research piece. “If it does, ARK believes the result will be measured in trillions, more than an order of magnitude higher than its $150 billion network value today.”

GBTC could be a nice perk for ARKW, but these days, the ETF is known for its almost 11% allocation to Tesla (NASDAQ:TSLA), one of the largest weights to the high-flying electric vehicle maker among all ETFs.

Amplify Transformational Data Sharing ETF (BLOK)

Expense ratio: 0.70%

The Amplify Transformational Data Sharing ETF (NYSEARCA:BLOK) is the least direct play on bitcoin of the funds highlighted here. Rather, BLOK is one of several ETF avenues to the blockchain, the technology underpinning bitcoin.

Like ARKW, BLOK is actively managed, giving it the ability to touch multiple corners of the blockchain universe. For example, BLOK features exposure to 15 industry groups spread mostly across the communication services, financial services and technology sectors. There are myriad uses for blockchain technology beyond the crypto space and those opportunities could underpin significant growth for the underlying market and BLOK as well.

“Forecasts suggest that global blockchain technology revenues will experience massive growth in the coming years, with the market expected to climb to over 23.3 billion U.S. dollars in size by 2023,” notes Statista. “The financial sector has been one of the quickest to invest in blockchain, with over 60 percent of the technology’s market value concentrated in this field.”

BLOK holds 56 stocks, including Dow components International Business Machines (NYSE:IBM), Microsoft (NASDAQ:MSFT) and Goldman Sachs (NYSE:GS), but those exposures are balanced with mid-cap and international equities, among others.

Author: Todd Shriber

Source: Investor Place: 3 Great Funds for Investors Interested in Bitcoin

These stocks to buy could deliver big gains in November, positioning them for even more upside in 2020

October is almost in the books and that means November is right around the corner. The second month of the fourth quarter is historically kind to stocks. Over the past 20 years, the S&P 500 has averaged November gains of 1.2%, making it the fourth-best month of the year for benchmark domestic equity gauge behind March, April, and October.

Of course, there are no guarantees that seasonal trends repeat from year-to-year, but knowing the months in which stocks typically perform well can be instructive. Add to that, stocks have some momentum heading into the eleventh month of the year. The S&P 500 is up 24% this year, sits near record highs, and has, to this point, defied October’s often-volatile reputation.

Investors can also consider sector-level strategies in the upcoming month, something I’ll explore in greater detail later in this piece. For now, let’s get into some of the stocks to buy in November.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) has already been on a torrid pace this year, surging 41% to rank as one of the best-performing names in the Dow Jones Industrial Average. The company recently reported third-quarter results. Thanks in large part to its Azure cloud businesses, the numbers were stellar and well-received by investors.

“For the quarter, the software giant reported revenue of $33.1 billion, up 14% from the comparable year-ago quarter and ahead of the Wall Street analyst consensus forecast of $32.23 billion,” reports Barron’s. “Profits were $1.38 a share, up 24% from a year ago and ahead of the consensus at $1.24 a share.”

Speaking of cloud computing and Microsoft, another point that could make this a stock to buy in November is a recent win over cloud rival Amazon (NASDAQ:AMZN) for a $10 billion Defense Department contract, a competition many market observers believed Amazon was leading.

There is some controversy already swirling around Microsoft winning this contract, but even if the bid is reversed (don’t bet on that), it could give investors a dip with which to embrace Microsoft as a stock to buy.

Wynn Resorts (WYNN)

Due to softness in the Chinese economy and recently tepid gaming revenue numbers out of Macau, the world’s largest gambling mecca, Wynn Resorts (NASDAQ:WYNN) may not appear to be an obvious stock to buy over the near-term.

However, the company reports third-quarter earnings on Nov. 6 and if its Macau results are in-line with or slightly better than already downbeat expectations, that would serve as a potential catalyst to make this a stock to buy. Investors considering a position in shares of Wynn cannot overlook the importance of Macau because the Chinese territory accounts for about two-thirds of the company’s revenue, if not more, on a quarter-to-quarter basis.

“While we believe WYNN shares could be stuck in neutral until we get more clarity around macro/political headwinds in China, at this point we still see value in the name for the patient investor who can stomach near-term volatility,” said Stifel analyst Steven Wieczynski in a recent note.

Industrial Select Sector SPDR (XLI)

Obviously, the Industrial Select Sector SPDR (NYSEARCA:XLI) is an exchange traded fund (ETF), not a stock, but the largest ETF dedicated to the industrial sector merits some consideration as a stock to buy in November. Historical data indicate that in the eleventh month of the year, each of the nine original sector SPDR ETFs post positive returns, but XLI is usually the second-best performer of the group.

At the holdings level, the market has already digested slack earnings and ugly guidance from XLI’s components Caterpillar (NYSE:CAT) and 3M (NYSE:MMM). Additionally, the recent spate of bad news surrounding Boeing (NYSE:BA), another important XLI holding, could be drawing to close. If that name becomes a stock to buy again, XLI’s fortunes would be immediately boosted.

Activision Blizzard (ATVI)

Video game publisher Activision Blizzard (NASDAQ:ATVI) reports earnings on Nov. 7, providing an opportunity for the company to potentially give some update on the performance of the recently released installment of the “Call of Duty” franchise. Additionally, investors may get some clarity on how the holiday shopping season is shaping up, possibly shedding new light on ATVI’s status as a stock to buy.

Adding to the interest around Activision possibly being a stock to buy in November is the Nov. 1 start of the company’s annual BlizzCon convention.

“The convention serves as a platform for Activision Blizzard to announce new games, hold esports tournaments, and offer fans exclusive merchandise related to its first-party titles,” according to Business Insider. “The video game company is famous for its World of Warcraft, Overwatch, and Diablo franchises, among others.”

There is talk that BlizzCon 2019 will feature multiple Diablo launches, the first ones in almost a decade, and possibly an Overwatch sequel as a well as a refreshed World of Warcraft.

Apple (AAPL)

All Apple
(NASDAQ:AAPL) has done over the past month is jump more than 10%, bringing its year-to-date gain to north of 56% while reentering the $1 trillion market value club. All that without yet having reported earnings. Apple’s stock to buy status will be tested following its Wednesday, Oct. 30 earnings report, but of course, that status could be renewed if the company makes bullish commentary on iPhone 11 sales.

November will test Apple as a stock to buy for another reason: the company’s long-awaited streaming entertainment service, AppleTV+ debuts on Nov. 1. AppleTV+ may not immediately affect the stock, but it’s reasonable to surmise analysts will be running channel checks on the launch throughout the month and its possible investors will be able to digest some data and commentary on that front later in the month.

What’s interesting about Apple as a stock to buy over the near-term is that it has defied a historical tendency for weakness in September and October. In fact, the stock’s torrid pace this month has prompted a spate of analyst upgrades and bullish price target revisions. If the next earnings report is exceptional, more of the same could be coming in November.

Nvidia (NVDA)

Semiconductor maker Nvidia (NASDAQ:NVDA) is already a star stock this year, up more than 51%. On Friday, Oct. 25, the shares were around $204.50 after gaining almost 4% on above-average volume, cementing a recent breakout. That closing price is above the average analyst price target of $193, suggesting that Nvidia could be a stock to buy simply because analysts probably need to ratchet up price targets on the name.

Adding to the Nvidia as a stock to buy thesis is rival Intel’s (NASDAQ:INTC) recent blowout earnings report which allayed some of the concerns about chip stocks following a weak report from Texas Instruments (NASDAQ:TXN) several days prior. What’s important about Intel’s update was data bullishness, a market that’s important to Nvidia as well.

Intel’s “quarter showed that data center demand was higher than expected, which leads him to believe that Nvidia is positioned to benefit from higher growth as well,” reports Barron’s citing RBC Capital Markets analyst Mitch Steves. “That prompted him to boost his earnings estimates for next year, hence the price-target increase.”

Shopify (SHOP)

Although Shopify (NYSE:SHOP) has more than doubled this year, the shares have been in a lull as of late with market participants debating whether recent weakness is a harbinger of more to come, or a buying opportunity in an e-commerce that rarely offers credible entry points.

No, Shopify still isn’t inexpensive, but that doesn’t mean it’s not a stock to buy. Actually, it may just be a stock to buy as holiday shopping ramps up thanks to a still firm U.S. economy supporting Shopify’s bread and butter clientele: small and medium businesses.

“Our small and medium business survey suggests the current demand trends across small and mid-sized merchants remains stable. E-commerce vendors continue to outpace traditional peers,” said Guggenheim analyst Ken Wong in a recent note to clients. “Our industry checks have been positive with expectations for gross merchandise value growth to mirror first half trends.”

Shopify’s Oct. 29 earnings announcement is likely to go a long way in charting the stock’s November fortunes, particularly if the company reports a narrower loss than the expected loss of 28 cents a share and if it can beat on the top line.

Author: Todd Shriber

Source: Kitco: 7 Stocks to Buy in November

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