In the Fed's Monetary Policy Report submitted July 15th, Fed chair Janet Yellen called out social media and biotech stocks as having valuations that appear "substantially stretched" (i.e. overvalued). We asked our top contributors for stocks which they view as well-or-under-valued -- biotech stocks the Fed is just wrong about. Below are their thoughts.

George BudwellWhile I agree with Janet Yellen's comments regarding biotech valuations for the most part, there are notable exceptions worth checking out. I think the recombinant nanoparticle vaccine maker Novavax (NASDAQ:NVAX) is one such company. Despite sporting a market cap close to $1 billion on a fully diluted basis, the stock looks fairly valued, in my opinion.

My optimism is based on the company's diverse clinical pipeline that has racked up positive results over the past two years. Chief among them, I think investors should keep a close eye on Novavax's experimental vaccine for respiratory syncytial virus, or RSV. According to the World Health Organization, there are 64 million new cases of RSV every year, and no prophylactic vaccine exists for the majority of patient populations.

Novavax's plan is to develop the vaccine for a host of at-risk populations, including pregnant women, infants, young children, and the elderly. To gain an understanding of the vaccine's potential market opportunity, I think an apt comparison is Pfizer's megablockbuster Prevnar for pneumococcal disease. Viewed this way, Novavax's present market cap looks like it accurately reflects the company's value proposition and current level of risk. 

Todd CampbellI don't agree with the Fed on Opthotech (NASDAQ:OPHT), an emerging biotech working on a treatment for age-related macular degeneration, or AMD.

Aging baby boomers are spiking demand for currently approved AMD treatments, including Novartis' Lucentis and Regeneron's Eylea. Lucentis', which is sold by Novartis overseas and by Roche in the U.S., generated sales of $2.4 billion for Novartis last year and $500 million for Roche in the first quarter. Eylea sales also impressed, notching $1.4 billion for Regeneron last year and $218 million during the first quarter for Bayer, its international partner.

Rather than displacing those blockbusters, Opthotech's Fovista hopes to make them work better. In phase 2 trials, patients taking Opthotech's Fovista alongside Lucentis' saw their vision improve by 10.6 letters on a standard eye chart, versus 6.5 letters when taking Lucentis alone.

That efficacy suggests that Fovista alone could have blockbuster potential that justifies its current $1 billion market cap, but Opthotech is even more intriguing now that Novartis' has paid Opthotech $200 million up front and agreed to $1 billion in milestones just Fovista's non-U.S. rights.

Brian Orelli: It's difficult to find value in this market for biotechs that have near term catalysts, but if you're willing to buy and hold for awhile, it's still possible to find attractive biotechs.

That's the situation with Sarepta Therapeutics (NASDAQ:SRPT), which is developing a Duchenne muscular dystrophy drug called eteplirsen. Based on the phase 2 data, it's hard to believe the drug doesn't work, but because of the limited number of patients in the study -- just six in the treatment group -- the Food and Drug Administration may not be willing to accept the data for an accelerated approval. Sarepta plans to give it a shot, applying to the FDA by year end.

Worst case scenario, the FDA tells Sarepta that the drug isn't approvable until a confirmatory phase 3 trial is completed, potentially pushing an approval into 2016. If you can wait that long -- and tolerate a potential drop if the accelerated approval doesn't come through -- Sarepta should produce solid multi-year returns.

Given the unmet need in Duchenne muscular dystrophy, it's not hard to see sales of eteplirsen approaching $1 billion annually. At a P/S of five, Sarepta Therapeutics market cap could reach $5 billion, over five times where it is now. Even if you factor in some dilution to raise capital, the risk-reward looks reasonable.