Atea Pharmaceuticals - AVIR - X10 Stock for Max Risk
Companies / BioTech Jul 04, 2021 - 06:24 PM GMTBy: Nadeem_Walayat
Life Sciences Biotech Smaller Cap High Risk Stocks Investing Binge
Why has my focus shifted to biotech stocks and not more tech stocks?
Firstly, I have been investing in biotech stocks for DECADES, it's just that since 2015 my focus shifted to the emerging AI mega-trend to make sure I was invested to capitalise on a trend that was clear to me would span DECADES, at the time I thought I was probably getting in late on the AI Mega-trend but clearly that is always the case! WE ALWAYS THINK we're late to the party but this trend is going to run right into the end of the 2030's
This also explains why I hold the likes of GSK and JNJ amongst a string of smaller cap biotech stocks many of which have been disappearing from my portfolio over the years usually due to being taken over as it looks likely to be the case for GW Pharma later this year. So I need to replenish this once much loved and now neglected stock sector with a string of new smaller cap high risk stocks for the next 5 to 10 years.
Secondly, our beloved AI stocks have been BID UP to high valuations, yes including Google, so they are not CHEAP, even after a 10% to 15% correction i.e. the likes of Microsoft and Amazon are discounting a lot of future earnings growth! Of course that does not necessarily mean that they are about to fall to what I would consider to be fair value let lone cheap levels as they did during March 2020 because at the end of the day they are GOOD stocks so usually command a healthy premium to invest in.
However, during the course of this exercise I am repeatedly finding that the biotech stocks are tending to be greatly unloved! Especially when one compares them to the barmy valuations that many of the smaller cap tech stocks that populate the likes of ARK INVEST have been lifted to such as TESLA and SQAURE and most of the rest.
So this does appear to be an opportune time to go on the hunt for smaller cap higher risk biotech stocks.
RISK RATINGS
I am also adding a risk rating to the high risk stocks where 1 is lowest risk and 10 highest risk in terms of something going wrong and the stock effectively crashing into becoming a penny stock or even going bust within the next 5 years. This is based on the sum of all my analysis of each stock and given my risk averse nature then most of the stocks will have a low probability of actually going bust within the next 5 years. Still this rating will give an extra measure of risk vs reward when entertaining potential position sizes.
Atea Pharmaceuticals - AVIR $22 - X10 for Max Risk 10
Have I saved the best till last? Atea Pharmaceuticals focused on discovering, developing and commercialising ANTIVIRAL therapeutics for patients suffering VIRAL infections, so one would think the stock has soared into the stratosphere, yes it had but not right now for 2 reasons. 1. Pharma sector is unloved, 2. It's a too small a cap stock for the big funds, i.e. $2 billion is too small for most of the fund managers out there. For instance the likes of Buffets Berkshire can only really focus on investing in mega-corps given the size of their fund. Which means we could be looking at one of those perfect 10X stocks! But first the fundamentals, trades on a racy PE of 37, but it is a small cap stock, PEG ratio is just 0.4! That is more than just good that is a pricing mismatch. Forecast ROE is a healthy 25% over the next 3 years and from what I can tell the company has NO DEBT! I hope they are not fiddling the books! Just to be sure there's no funny business going on I checked to see if insiders are selling stock, NO, in fact over the past few months insiders have bought $20 million of stock! Looking further into its stock activity reveals a company called FMR LLC quietly building a up a stake that has bought up 13% of the company over the past 12 months, FMR better known as Fidelity Management and Research. Clearly FMR have spotted this hidden gem and have been busy trying to buy as much stock as they can without sending the stock price soaring.
Looking at the stock price chart and the only thing that comes to mind is what he hell happened here? Looks like a bloodbath went from $30 to $95 and now down to $22!
So the stock charts a blood bath, but the fundamentals look good, and there's no point in generating buying levels for this stock chart because there is literally empty space below i.e. the stock is now trading lower than it's IPO of $24,. So the Buying level is where it is already trading $22. It's worth a punt as unless there is some funny business going on with the company accounts, It's worth a stake so I will definitely be buying some Atea stock. Though given it's price chart it is going to have to be classed as a VERY HIGH RISK stock i.e. I can tell it is going to be volatile as hell! Gyrating all over the place towards new highs. Anyway I am going to buy a small stake and see what happens as given it's current price of $22 it could easily X10 but then again half again to $10, that is the risk vs reward of high risk stocks for when a stock is an obvious good buy then it is too late because the price will already be trading at $200. Anyway, we will find out in due course. I'll be buying Atea to 22, all or nothing, invest and forget for X10, worth the risk vs the reward i.e. risk 100% for a possible 1000%+, but the price chart won't be pretty to watch!
High Risk Stocks Portfolio Buying Levels
Here is my new high risk stocks table which was necessary to separate from my main AI stocks table as I will be adding at least 10 more smaller cap higher risk stocks to this list over the next few weeks as I complete my high risk stocks analysis binge at the rate of screening 6 stocks an hour.
This article is an excerpt from my recent extensive analysis that concludes in my latest biotech stocks with the potential to X10 over the coming years Five More Small Cap Bio and Tech Stocks to Invest for 2021 and Beyond! has first been made available to Patrons who support my work.
Topics Include:
- Invest and Forget
- Stock Market Early Summer Correction Review
- AI Stocks Strength vs Weakness
- RAMPANT MONEY PRINTING INFLATION BIG PICTURE!
- HIGH RISK STOCK BUYING LEVELS
- RISK RATINGS
- WESTERN DIGITAL - WDC $71 - CHIA! - Risk 1
- Life Sciences Biotech Smaller Cap High Risk Stocks Investing Binge
- Biotech stock 1 - Cheap Low Risk Pharma - Risk 1
- Biotech stock 2 - HIGH RISK GENE EDITING - Risk 9
- Biotech stock 3 - Low Risk 2
- Biotech stock 4 - X10 for Max Risk 10
- High Risk Stocks Portfolio Buying Levels
- Covid India Black Mold Epidemic
- Bitcoin and Raven Coin Buying Levels
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Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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