This Sector Will Lead the Next Bull Market…

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – Every bear market is followed by a bull market…just like how spring inevitably arrives after every winter. Sure, it’s easy to lose sight of this fact in the middle of a brutal bear market, but investors need to realize that amazing opportunities are just around the corner. And, NOW is the time to start preparing. I expand on these thoughts below and reveal the sector that I believe will deilver the highest profits to investors when the bull begins to run again. Read on below for details…

One of the most reliable ways to find the best opportunities for the next bull market run,  is by focusing on the sectors that have the best combination of growth, value, and catalysts. Utilizing this strategy in the previous decade would have led investors to focus on SaaS or Internet stocks.

Many of the top names in these sectors gained more than 1,000% during the previous bull market. Of course, investors will need to find new stocks in new areas to achieve such returns during the next bull market.

Today, I want to talk about the biotech sector, and discuss 3 reasons why every investor needs to pay attention.

#1: Valuation

While so many parts of the market became egregiously overvalued, biotechs are an exception as the entire sector was flat between 2015 and 2022.

BUT, only the stocks were flat. Earnings actually EXPLODED.

The best way to see this is the weighted average P/E for the biotech ETF, IBB which went from 83 in 2015 to 12.5 now.

From a more qualitative perspective, we can see that the IPO market has dried up along with inflows from retail investors and institutions. In fact, nearly 25% of small and mid-cap biotechs have more cash on hand than their actual market caps.

#2: Growth

Usually, investors can only find attractive valuations in boring industries with limited growth prospects.

Biotechs are a rare and notable exception.

Populations in the developing world are aging at a rapid pace. There is the famous stat that Japan sells more adult diapers than baby diapers. Well, this is going to be the reality for the US and Europe in a few decades as well.

An aging population also means that demand for new drugs will also be increasing. There are always new innovations in the space that are leading to better outcomes in terms of diagnosis and treatment.

Healthcare spending also continues to grow at a faster rate than the overall economy.

This is another trend that won’t abate anytime soon given that a large share of this is subsidized by the government. And, there is no political appetite on either side of the aisle to change this arrangement.

#3: Catalysts

An appealing growth and value backdrop will pique any investors’ interest. But learning about the powerful catalysts in play will turn this interest into an obsession.

The most potent is that we are now in an environment of slowing growth. At the start of the year, inflation was the biggest threat to the economic outlook.

This has now been replaced by a recession. The best evidence of this is longer-term rates turning lower along with forward-looking inflation indicators.

This is a brutal environment for most stocks but manna for biotechs. These companies’ bottom and top lines are disconnected from economic or monetary conditions. As the economic outlook erodes, money will flow from cyclicals into sectors that are more insulated from the business cycle.

Another catalyst for the sector are the barren pipelines and flush balance sheets of major pharmaceutical companies.

This puts a bid under the biotech sector as these companies are dependent on the biotech sector for the innovation that will deliver the next generation of blockbuster drugs.

Finally, the most exciting catalyst is this exact innovation. Over the past decade, the cost of drug-development has declined due to computer modeling and better understanding of diseases and the human body. This is leading to better margins and outcomes.

These technologies are also serving as a bridge to a future of personalized medicine. The first step is in improving diagnosis in terms of accuracy and speed. This is where we are today.

The most exciting part of the biotech space is in the micro-cap and small-cap areas as these are the companies with the most potential. As noted above, many are trading at valuations that are below the cash on their books.

Most investors simply don’t have the time or inclination to dedicate serious amounts of time and energy to learn about the nuances of various biotech companies.

That’s why we do the heavy lifting (and thinking) to identify the highest-quality companies in the biotech space.

 What To Do Next? 

Our POWR Stocks Under $10 service is dedicated to this ‘niche’ that is being ignored by Wall Street and the majority of investors. It is specifically designed to consistently find these types of companies and other winning low-priced stocks.

This unique portfolio service harnesses the quantitative power of our “Top 10 Stocks Under $10” strategy which has generated a +59.43% average annual return since 1999—and is significantly outperforming the S&P 500 this year while most investors are mired in losses.

Beyond great picks I also explain the all important “WHY” behind each move we make. Why to buy now…and when to sell for maximum gains.

You can experience these market shattering returns for yourself, by taking a risk-free 30 day trial for just $1.

And now is the perfect time to do so because of the current market environment. Plus I am putting out 2 exciting new trades this Monday morning 7/25.

To get these timely trades, plus full access to the rest of the stocks in the POWR Stocks Under $10 portfolio…and all the winning trades to come in the future, then simply click the link below:

About Stocks Under $10 with 30 Day Trial >>

All the Best!

Jaimini Desai
Chief Growth Strategist, StockNews
Editor, POWR Stocks Under $10 Newsletter


SPY shares closed at $395.09 on Friday, down $-3.70 (-0.93%). Year-to-date, SPY has declined -16.20%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Jaimini Desai


Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating
.INXGet RatingGet RatingGet Rating
DIAGet RatingGet RatingGet Rating
IWMGet RatingGet RatingGet Rating
QQQGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Recession or Not Recession…That Is the Question

Every investor appreciates that recessions and bear markets go hand in hand. But the definition of a recession often seems more difficult to pin down. So are we in a recession? And if not, then does that mean that disaster has been averted or that the pain train is still rolling towards investors? This is an important debate because it helps us appreciate what lies ahead for the stock market (SPY). We will tackle this vital topic in this week's commentary. Read on below...

:  |  News, Ratings, and Charts

3 Active Stocks on Wall Street to Buy Right Now

Even though the U.S. stocks ended July with decent gains, growing recession fears could keep the stock market under pressure in the near term. However, despite the current market headwinds, it could be wise to invest in fundamentally sound stocks, Microsoft (MSFT), SIGA Technologies (SIGA), and Fortinet (FTNT), which have been active on Wall Street lately. Read on to learn more…

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

:  |  News, Ratings, and Charts

2 Winning Stocks to Pay Attention to This Week

Concerns over soaring inflation, the Fed’s aggressive interest rate hikes, the decline in GDP for two consecutive quarters, and a potential recession are expected to keep the stock market under pressure in the near term. Fundamentally sound and winning stocks Murphy USA (MUSA) and JAKKS Pacific (JAKK) could be good additions to your watchlist as investors prepare for a busy week of inflation data. Let’s discuss…

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News