Please ensure Javascript is enabled for purposes of website accessibility

3 Healthcare Stocks That Could Add a Spark to Your Portfolio

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking to give your portfolio a jolt? Consider investing in these three spicy healthcare names.

Source: Images_of_Money via Flickr Creative Commons.

Investors who are looking to add a little jolt to their portfolios should strongly consider looking at small-cap biotech stocks. If you are smart (or lucky) enough to find a winning biotech stock, the returns can simply be extraordinary, and a single great name can add a serious boost to your portfolios returns.

We asked our team of Motley Fool healthcare contributors to share a name that they believe can add a little spice to your portfolio's return. Read below why our team thinks Amicus Therapeutics (FOLD 2.51%), Sarepta Therapeutics (SRPT 1.40%), and ACADIA Pharmaceuticals (ACAD -1.40%) might be just the next home-run biotech stocks to add to your portfolio.

Todd Campbell: One way to add a little performance-related spark to your portfolio is to include small-cap stocks with catalysts coming that could send shares higher. For example, Amicus Therapeutics is one company I've included in my portfolio.

Amicus Therapeutics is a clinical-stage biotech company researching drugs for rare diseases. While Amicus is by no means a risk-free stock, it does already have one drug, Galafold, under regulatory review, and if Galafold is approved, it could have nine-figure sales potential.

Galafold is designed to treat Fabry disease, a rare enzyme deficiency disorder that is currently treated by enzyme replacement therapies with six-figure annual price tags and hundreds of millions in annual sales.  

Initially, Galafold is being reviewed as a monotherapy for a subset of Fabry disease patients with an amenable genetic makeup. The company estimates that as many as half of all Fabry disease patients could qualify for Galafold therapy, but that addressable patient population may grow over time.

Because Galafold has a different mechanism of action than other existing therapies, Amicus Therapeutics is conducting studies evaluating its use alongside them. If those trials pan out, Galafold could eventually be used in the majority of Fabry disease patients, and for that reason, I find the stock to be incredibly intriguing.

George Budwell: When it comes to spicy biotech stocks, Sarepta Therapeutics is about as hot as it gets. Sarepta's stock has rocked wildly back and forth over the last few years as the Food and Drug Administration has changed course numerous times on its decision on whether or not to review the company's experimental Duchenne muscular dystrophy drug, eteplirsen. 

But now that the FDA has set a formal review date of Feb. 26, 2016, the moment of truth is nearing for Sarepta and its best chance at rapidly transforming into a commercial operation.

Here is the situation in a nutshell: Eteplirsen, if approved, is expected to generate peak sales in excess of $700 million within the next decade. So, even with a market cap of around $1.3 billion, it's certainly possible a green light from the FDA could cause Sarepta's shares to double from current levels. 

The problem, however, is that eteplirsen's approval is far from a sure thing. As most investors are aware by now, the drug has run into serious headwinds because its midstage study, which is the basis of the current regulatory filing, only enrolled 12 patients. 

The FDA could therefore very well send Sarepta back to the clinic to ask for more data prior to an approval. In that case, Sarepta's shares are undoubtedly going to take a major haircut. 

As such, I think this speculative biotech is only suited for investors looking for jaw-dropping growth opportunities, but who also truly understand the serious risks that come with the territory.

Brian Feroldi: George and Todd offered up some great small-cap names for you to consider, so I'll toss in one more that's currently in mid-cap land, but still offers huge upside: ACADIA Pharmaceuticals.

Acadia is focused on creating products that treat neurological disorders, and since the company is still firmly in the clinical stage, it remains a more speculative name. However, that may be changing soon enough; the company announced earlier this month that its lead product candidate, Nuplazid, which the company has studied as a treatment for Parkinson's Disease Psychosis, had officially been submitted for FDA approval.

Investors have been bidding up shares of Acadia for years now, as Nuplazid looks like it could be the real deal. It has been granted the much coveted "breakthrough therapy" designation by the FDA, and it offers hope to patients who suffer from Parkinson's Disease Psychosis, which is a disease that currently has no real treatment options.

Analysts expect big things from Nuplazid, with peak sales currently expected to eclipse more than $2 billion. However, the company is also currently in phase 2 testing for the compound used in Nuplazid, called pimavanzserin, as a treatment for Alzheimer's Disease Psychosis and Schizophrenia, which could certainly push that estimate higher.

I'm a big fan of buying into stocks that have already thumped the market's return, and where insiders hold a significant chunk of stock, and Acadia looks great on both of these metrics. While the company is far from a sure bet, for investors willing to take a risk, Acadia certainly has the potential to add a spark to their portfolios' returns. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sarepta Therapeutics, Inc. Stock Quote
Sarepta Therapeutics, Inc.
$72.13 (1.40%) $1.00
Acadia Pharmaceuticals Stock Quote
Acadia Pharmaceuticals
$16.87 (-1.40%) $0.24
Amicus Therapeutics, Inc. Stock Quote
Amicus Therapeutics, Inc.
$7.96 (2.51%) $0.20

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.