The stock market is off to a fantastic start this year, with the S&P 500 index up 16%. But biotech stocks are performing even better -- the SPDR S&P Biotech ETF is up nearly 19%.

Which biotech stocks look like great picks to deliver strong returns going forward? That's the question we posed to three Motley Fool contributors. They identified Amgen (AMGN 0.66%), Emergent BioSolutions (EBS 4.50%), and Viking Therapeutics (NASDAQ: VKTX) as their top biotech stocks to buy in May. While all three are trading well below their 2018 highs, here's why they look promising.

Test tubes with increasingly higher levels of green fluid and a green arrow swooping up in the background.

Image source: Getty Images.

Taking a "BiTE" out of cancer

Todd Campbell (Amgen): Every year the top scientific minds in cancer get together in early June for the American Society of Clinical Oncology (ASCO) conference to discuss the latest advances. This year, Amgen could emerge from the conference a winner after presenting data on bispecific T cell engager (BiTE) drugs, two-sided antibodies that bind to a target and a T cell to overcome cancers' natural defenses.

At ASCO, management plans to present data on AMG-420, a BiTE targeting BCMA, a protein expressed in multiple myeloma. Last year, Amgen said AMG-420 elicited a complete response in five heavily pretreated multiple myeloma patients, leading industry watchers to wonder if it could be a better solution than highly touted chimeric antigen receptor T cell gene therapies under development at bluebird bio and others.

Amgen could also benefit from first-in-human results to be presented at ASCO for AMG-212, a BiTE targeting an antigen expressed in most prostate tumors. Bayer conducted the study under a license with Micromet prior to Amgen acquiring it in 2012. If the data is encouraging, it could be good news for a new half-life extended BiTE molecule, AMG 160, that Amgen's moved into clinical testing in the indication.

Also, Amgen will share first-in-human efficacy and safety data for AMG 510, a drug targeting KRAS G12C, a common mutation occurring in 14% of lung adenocarcinomas and about 4% of colon cancers. Previously, RAS mutations like this have been considered undruggable, but Amgen's R&D team thinks AMG 510 could change that.

Admittedly, there's no guarantee data presented at ASCO will send Amgen's shares higher. But, I think there's a good chance it happens. The company's growth has slowed lately because of expiring patents. If these presentations convince investors that growth could reaccelerate in the future, then picking up shares now could be a smart decision.

Sometimes the best time to buy is when the news is bad

Chuck Saletta (Emergent BioSolutions): Emergent BioSolutions saw its shares get shellacked recently after it delivered disappointing earnings results and guided the near term downward. As painful as that move was to shareholders who owned the company before the news hit, the decline might very well be just what those sitting on the sidelines need in order to consider taking the plunge to invest.

After the plunge, Emergent BioSolutions sported a stock price of around $49 per share. Despite the short-term pain Emergent is projecting, analysts anticipate the company will earn around $3.33 per share in 2020. That gives it a price-to-anticipated-forward-earnings ratio of less than 15 -- making it reasonably priced for investors who have the patience to wait out the short-term pain.

Of course, any estimates are based on projections of the future, and it's possible that Emergent BioSolutions won't deliver those expectations. Still, with a combination of existing products, a decent government contract to work on terror countermeasures, and a pipeline that ranges from pre-clinical to phase 3 testing, there's a good chance it will.

Even if it doesn't deliver phenomenal earnings in the near term, Emergent BioSolutions sports a decent balance sheet, with a debt-to-equity ratio below 0.8 and a current ratio above 3. That gives investors reason to believe that even if the recovery takes a bit longer than expected, the company still has the financial strength and stability to see it through.

Every so often, the market's short-term jitters give investors with a longer-term focus the opportunity to buy a company at a decent price. Thanks to the market's concerns with Emergent BioSolutions, now just may be one of those opportunities.

An increasingly hot commodity

Keith Speights (Viking Therapeutics): Viking Therapeutics is more than 50% below its highs set last year after reporting encouraging phase 2 results for experimental drug VK2809 in treating patients with non-alcoholic fatty liver disease (NAFLD) and elevated low-density lipoprotein cholesterol (LDL-C). But I think that Viking is an intriguing biotech stock right now -- and I suspect there are some big drugmakers who might have similar thoughts.

The real promise for VK2809 is in treating non-alcoholic steatohepatitis (NASH). The disease has no approved treatment yet, and industry observers project that it will become a huge market in the not-too-distant future, as several drugmakers scramble to develop NASH drugs. Viking plans to start a phase 2b clinical study evaluating VK2809 in NASH later in 2019.

I think that Viking Therapeutics is in the sweet spot for big biopharmaceutical companies seeking to bolster their NASH pipelines. The company is relatively cheap with a market cap of only a little over $600 million. Its lead candidate is promising and its risk is at least a little lower than some phase 2 NASH drugs might be after its success in NAFLD and LDL-C.

New Gilead Sciences CEO Daniel O'Day recently stated that his company would likely look for bolt-on acquisitions, noting that the "vast majority of the opportunities are kind of in early stage or mid-stage." With Gilead's two late-stage clinical failures for its NASH drug selonsertib, Viking could be a great fit that meets O'Day's criteria.

Viking Therapeutics is still a pretty risky stock, though, and won't be a good pick for many investors. For aggressive investors, though, I think Viking could be worth the roll of the dice.