Are biotech stocks in a bubble? Is that bubble collapsing?
These are the two questions at the forefront of investors' minds. Given the tremendous run of biotech stocks, the iShares NASDAQ Biotechnology Index is up 80% over the last 2 years, it's easy to see why the bubble talk started. Mix in a tsunami of IPOs as new biotechs, some highly questionable, capitalize on easy money, and combine it with the relative ease of picking a multi-bagger stock -- it quickly adds up to irrational investor exuberance.
Exuberance that can be fleeting. That same biotech index is down 15% in the last month, with some individual stocks getting hit considerably worse. However, whenever there is a sector wide sell-off, good stocks get indiscriminately dumped alongside the bad. This is when contrarian investors live the famous Warren Buffett saying of being "greedy when others are fearful," and find quality businesses with strong revenue and growth potential.
On this edition of Market Checkup, Motley Fool health care analysts David Williamson and Michael Douglass discuss the fallout of the biotech collapse. They put on their best catcher's mitts and look to grab a few falling babies that have been thrown out with the biotech bathwater. Watch and find out at what two stocks they think are interesting at these new bargain prices.
David Williamson has no position in any stocks mentioned. Michael Douglass has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.