Biotech Supplier Thesis
Buying biotech equipment providers for big gains is starting to look like shooting fish in a barrell to me: not only do you have biotech venture investments surging, but municipalities (US and Int'l, such as Dubai & Singapore, not to mention Chindia) are viciously competing with one another to become the next Boston-San Diego-Silicon Valley-Research Triangle-ish biotech hub. I havn't read a contemporary economic development plan that hasn't mentioned biotech!
I don't even worry about a potential pop in the somewhat frothy biotech boom; these companies are a play on the growth of the industry's research/development/infrastructure accumulation, just like companies/contractors/people that were leveraged to the building of fiber optic cables did just fine during the bandwidth/tech/.com boom-bust; it was the companies that were supposed to make a profit off the damn stuff that really suffered! And these guys tend to be fairly priced people; most have PE ratios below 40, wheareas most biotechs are lucky to have revenues let alone earnings, and when they do have the later, sell for twice their anticipated PEG ratios! sure, you can make more off a blockbuster than the newest equipment, but the risk is just proposterous, and oh boy are the benefits priced in!
The only thing I worry about is the fact that new diagnostic companies are a dime a dozen lately; it seems like every other day some scientist comes up with a better way to use nucleic acid hybridization to tell you what you got faster/easier and help you make plenty more of it if need be. But I can't buy their stocks, and more likely than not they''l just get swollowed up in the field. If a disruptive technology shows up, and I see it, I'll be sure to snap it up and short the whole group.
But till then, I'm Long, Very Long.