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Biotech has been so bloodied and battered this year that the sector is 30% off its peak from last summer, as measured by the iShares Nasdaq Biotech ETF.

However, from a big-picture standpoint, this is an industry with a lot to love, especially as merger and acquisition activity heats up. Taking the long-term view, biotechs are up 141% over the past five years, beating the pants off the return of the S&P 500.

In fact, looking at the industry from a fundamental perspective, right now looks like a great opportunity to buy. Why? First, the customer base is growing, since baby boomers are aging and requiring more medication. Second, the Affordable Care Act greatly expanded insurance coverage, meaning many more people have the opportunity to use those treatments.

But possibly the greatest reason is simply timing. Remember the Human Genome Project? It decoded our genetic makeup and gave scientists huge amounts of new data. A decade later, biotech companies that developed drugs based on that data are finally reaching the end of testing and approval.

But with so many innovative drugs headed for prime time, which biotech could see the biggest gain over the next 12 months? Our contributors step up to name their winners.

Multiple targets

Cory Renauer: Shares of Celldex Therapeutics (CLDX 2.29%) took a pounding when the company's lead drug failed to outperform the standard of care in a form of brain cancer earlier this year. The stock is still down more than 80% year to date, and its enterprise value (a theoretical purchase price that factors in cash and debt) is just $210 million.

The company has a targeted cancer therapy, entirely different from the one that failed, in a trial that could support an approval for a well-defined and underserved group of breast-cancer patients. This drug, glemba, rang the bell in a previous study among a smaller group of patients similar to those enrolled in its registrational trial. If it performs in line with previous results, its eventual approval is nearly certain.

While I think Glemba alone is worth more than the stock's current valuation, Celldex also has varlilumab, an immune-system modulator that binds to a specific target on the surface of many cancer cells. When varlilumab reaches its target, it tells the immune system to rev up. While drugs it's in combination studies with -- for example, Opdivo from Bristol-Myers Squibb -- in effect release the brakes on immune responses to cancer cells, Celldex's varlilumab steps on the gas once it reaches its target. There were fears that varlilumab might overstimulate the immune system, but according to Celldex's management, its safety profile is clean.

Further out, the company also has three more drugs aimed at different targets, for a total of five clinical-stage candidates in 13 trials at present. There will be a lot of data coming out of Celldex over the next 12 months that could send this stock into the stratosphere.

Waiting for regulators

Brian Feroldi: One company that I think could move substantially higher over the next year is Radius Health (RDUS -1.36%), a $1.7 billion market cap clinical-stage biopharma primarily treating diseases of the bone.

Radius Health is currently on deck to hear from regulators in both the U.S. and EU about a go/no-go decision on the company's lead compound, called abaloparatide. The company believes that this drug could help to strengthen the bones of millions of women who suffer from osteoporosis, thereby helping to prevent some of the 2 million bone fractures that this disease causes in the U.S. alone. Osteoporosis is a huge problem around the world, so perhaps it's no surprise to see that some analysts see peak sales of this drug eventually eclipsing $1 billion.

While we won't know a decision for quite some time, my hunch is that the drug will get the green light from regulators. My reasoning is that in phase 3 clinical trials, patients who used abaloparatide showed an 86% reduction in their risk of having a spinal fracture compared with those in the control group. That's a huge difference, which hints that this drug holds real promise to help keep women with osteoporosis healthy.

Regulators have not yet released a target decision date on abaloparatide's application as of yet, but we do know that the Committee for Medicinal Products for Human Use -- a European committee of healthcare providers who offer recommendations on potential product approvals -- should release its opinion on abaloparatide within about six months. If it offers up a positive opinion, that bodes well for the company's chances of winning approval both here and abroad, so I could easily see shares of Radius Health soaring higher if the company gets good news.

Screamingly cheap

Cheryl Swanson: When I look over the long list of biotech stocks that are still going begging in the face of a nine-month old tweet from Hillary Clinton's announcement of possible proposals to halt escalating drug prices, United Therapeutics (UTHR -1.63%) stands out as the juiciest prey an investor could bite into.

United looks insanely cheap right now. The forward P/E is hovering below 8, and the trailing price-to-sales ratio is just under 3. Those kind of ratios are extremely low for an orphan-drug company.

United is the leading player in the treatment of pulmonary arterial hypertension (PAH), a life-threatening disease afflicting around 500,000 people globally, with only a small percentage receiving treatment. One huge plus for United is that it doesn't follow the bad example of its peers in the rare-disease market that boost revenue by continually raising prices on their already nosebleed-level-priced orphan drugs. Not only is this strategy morally hazy, it also adds a layer of risk to companies that employ it given the recent drug pricing scrutiny from top politicians.

A great example of how United differs from the pack is its leading drug, Remodulin. United has refused to raise its price for over five years. But by focusing on enlarging the market, Remodulin sales have kept growing year over year. While the late-stage PAH treatment is growing by only single digits yearly, drugs designed to treat the disease in earlier stages are exploding. For example, oral therapy Orenitram saw 85% revenue growth year over year last quarter. The company is also attempting to expand its drug Tyvaso into a variant of PAH projected to be worth about $3 billion to $4 billion yearly. United's research pipeline for PAH also includes implantable Remodulin, further Orenitram trials, and Esuberaprost.

Analysts cite PAH drug competition from the likes of Gilead Sciences, Bayer AG, and Actelion Pharmaceuticals as headwinds. But United is rapidly expanding outside PAH, having launched the only FDA-approved therapy for the childhood cancer neuroblastoma. The company is also seeing success in its projects on organ transplants, with the Mayo Clinic recently becoming a key collaborator.

Biotech investing is risky. You can lose your shirt, but you can also win big. Just remember, you don't need every biotech stock you own to win. You just need some of them to win big.