Investing in biotech stocks isn't for the faint of heart. There can be significant volatility and risk. However, putting some portion of your portfolio in biotechs holds the potential to pay off nicely over the long run.

We asked three Motley Fool contributors to pick the top biotech stocks in which to invest up to $1,000. Here's why they chose Vertex Pharmaceuticals (NASDAQ:VRTX), Gilead Sciences (NASDAQ:GILD), and Beam Therapeutics (NASDAQ:BEAM).

A gloved hand holding a glass beaker with a $100 bill in it and several $100 bills underneath it.

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1. Vertex: Don't count this biotech out yet

Prosper Junior Bakiny (Vertex Pharmaceuticals): Shares of Vertex Pharmaceuticals, a biotech that focuses on developing treatments for rare diseases, have significantly lagged the market over the past year. One reason behind this poor performance was the company's decision to discontinue the development of VX-864 -- a potential treatment for alpha-1 antitrypsin deficiency -- after the medicine flopped in a phase 2 study.

Investors may also be worried that Vertex is running out of room to grow in the market for drugs that treat the underlying causes of cystic fibrosis (CF). This illness affects patients' internal organs. Vertex has held a monopoly in this space for the better part of 10 years, during which the company's revenue and earnings grew by leaps and bounds. But Vertex is far from having peaked in this market.

Of the 83,000 CF patients in North America, Australia, and Europe, more than 30,000 remain untreated. Vertex's most important product is Trikafta, a medicine that can treat up to 90% of this patient population. Trikafta's patents won't expire until mid-2030. That means Vertex's current lineup of drugs can continue posting increasing sales.

Meanwhile, the biotech has an exciting pipeline. The most promising candidate is arguably CTX001, an investigational therapy for transfusion-dependent beta-thalassemia and sickle cell disease (both are rare blood-related diseases with few safe and effective treatment options). Vertex and its partner CRISPR Therapeutics aim to submit CTX001 to regulatory authorities by the end of 2022.

The drugmaker is also working on a potential therapy for type 1 diabetes called VX-880. There is also VX-548, which Vertex is developing to treat acute pain. Vertex will release some data from ongoing clinical trials within the next six to nine months.

Positive results could cause the stock to soar in the not-too-distant future. More importantly, the biotech remains an excellent stock to buy and hold for the long term. With a portfolio of drugs that can still drive top-line growth and promising pipeline programs, investors would do well to consider purchasing shares of this top biotech. 

2. Gilead Sciences: Dividends plus value

David Jagielski (Gilead Sciences): To make the most of a $1,000 investment, I'd suggest focusing on a cheap dividend stock that can set you up for some strong returns. One stock that stands out for that purpose is Gilead Sciences.

What I love about this investment is that you can count on a solid 4% yield from it. That's well above the S&P 500 average of only 1.4%. On a $1,000 investment, that yield is going to generate $40 in annual income for your portfolio. And if you pile more money into the stock, then those dividend payments will get bigger.

There's also room for Gilead to increase its dividend payments. In its most recent quarterly results (for the period ending Sept. 30), the company's diluted earnings per share were nearly three times the size of its quarterly dividend. If Gilead can keep those strong results going, investors should expect some dividend hikes. 

Despite the tremendous success of Gilead's COVID-19 treatment, Veklury, the biotech stock's returns have lagged behind the S&P 500 this year. Shares of Gilead trade at a forward price-to-earnings multiple of less than nine -- cheaper than other big biotechs such as Amgen and Biogen

The bulk of Gilead's revenue outside of Veklury comes from its HIV drugs, which brought in $4.2 billion this past quarter, accounting for 77% of non-Veklury sales. Gilead's top-selling HIV drug, Biktarvy, has a 41% market share in the U.S. However, total HIV sales dropped 8% year over year in the third quarter due to the loss of exclusivity (LOE) for some key drugs. Factoring out those LOEs, Gilead's HIV revenue rose 4% in Q3.

Gilead remains a top HIV drugmaker. It offers an excellent dividend. And the company's COVID-19 treatment could continue to enjoy high demand. Overall, I think this stock is a great pick in which to invest $1,000.

3. Beam Therapeutics: High risk, high reward

Keith Speights (Beam Therapeutics): My pick is much smaller than either Vertex or Gilead. Beam Therapeutics' market cap currently stands at less than $5.5 billion. It's also much riskier than the other two big biotechs. However, I think Beam could potentially deliver high rewards in exchange for that risk.

The company focuses on genetic base editing. Your DNA is made up of base pairs of nucleotides that are commonly referred to by their initials -- A, C, G, and T. Most of the leading gene-editing biotechs use a method that cuts the genome like scissors. Beam's approach, though, is more like a pencil with an eraser. It can rewrite letters of the genome one by one. 

Beam thinks its base-editing technology holds the potential to treat a wide range of diseases. It's not alone in that view. ARK Invest CEO Cathie Wood is a big fan of the stock. She's added shares of Beam to her flagship ARK Innovation ETF and the ARK Genomic Revolution ETF

Currently, Beam's pipeline consists only of preclinical programs. However, the company plans to soon initiate a phase 1/2 clinical study evaluating BEAM-101 in treating sickle cell disease. 

Beam's risk level is high because the odds of preclinical and early-stage clinical programs ultimately winning regulatory approvals aren't great. If the company can achieve success in one indication, though, it could have lots of opportunities to target other diseases -- and not just genetic diseases. 

This isn't a stock that you'd want to bet the farm on. But even a small investment could pay off big-time if Beam's base-editing approach delivers on its potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.