Interest Rates Can't Touch These 3 Stocks (One is Up 540%)

Drug prices are back in the headlines, but this sector as a whole has been performing incredibly well for investors this year. Joining us today is Mark Likenfeld with the Oxford Club to share his top three healthcare or biotech picks in the market today. Mark, so glad to talk about this. It's been a while since we've covered it on our show, but really this topic is right back in all of the headlines this week. Let's talk about that. >> Yeah, great to see you, Bridget. And you're right, the headlines this week are about healthcare because the president announced a deal with some more drug companies uh to presumably lower drug prices in the United States. And so people are certainly paying attention. Plus, we've had uh some some pretty big news in biotech, particularly from Madna and Merc that had a a fantastic early outcome for a melanoma drug. and and we'll talk about Madna some more in a minute, but there's been a lot to talk about as far as healthcare in recent days. >> Yeah, I want to talk about the sector as a whole for investors before we get into the three names that you have for us today. And these are all really strong names in the healthcare biotech sector. But we know as investors, if you're new to the healthcare or biotech space, there can be that volatility in the space simply because of what you just said about MADNA, when you get a new drug approved, you can see a stock spike really quick and then if there's one bad headline, a bad result, or a bad outcome for a patient, you can see a stock tumble overnight, too. So, let's talk about those risks a little bit. Does that really exist kind of in every stock in this sector or are some stocks uh better prepared to handle that kind of volatility that can come with specific drugs and their outcomes? >> Yeah, that's a a great question. So the big giants, the you know the giant pharmas, the Mercs, the Eli Liies, they're they can weather bad news a lot better because they have such deep pipelines. They have, you know, huge portfolios of drugs that are on the market. So one bad clinical trial outcome or one FDA rejection shouldn't be the end of the world even if it is a highly anticipated drug. Some of the smaller names, you know, the midcap names, smaller names, that can be a very very big problem. If it's their lead drug candidate and they are not going to be close to, let's say, having another drug on the market anytime soon. In those situations, you can see stocks get absolutely hammered with bad news. So, you do need to position size accordingly, be able to handle the volatility if you're going to the small cap midcap side of of biotech particularly because you can get those giant moves. When it works out, it's great. But when it doesn't, sometimes a stock can get cut in half overnight. >> Yeah, those giant moves absolutely happen. And one of the stocks we're going to talk about on this list today up nearly 500% in a year. So, these are can be huge movers. Again, we talk about AI and tech stocks all of the time on this channel. It's what most investors are interested in right now, but it's important to not forget about these other sectors of the market like healthcare and like biotech that are seeing in many cases just as large of gains or even larger gains in some cases in this current environment. Another thing making headlines this week are the interest rates and the bond market and that's really been making headlines since that Jackson Hole meeting last week. And how does healthcare play into that conversation, Mark? Yeah, it's one of the things I really like about this sector in that it's pretty much interest rate neutral. Uh, you know, if interest rates continue higher, if the 10-year yield is at 5%, even 6%, are people going to stop taking their medicine? Probably not. You know, and and healthcare companies aren't always uh, you know, the the companies that are are loaded with debt. I mean some of them are certainly just like any industry but mostly they are not loaded with debt especially on the biotech side because when they are first starting out these are companies often that can't don't even generate revenue yet so nobody's going to lend them money. So they're the way they raise capital is through selling stock or private equity um you know in the early stages. So they're they're typically not loaded with debt. They can certainly as things go on they can certainly take on some debt maybe sell convertible shares uh which is something Madna did recently after their stock popped but it's not a sector that you know really moves based on interest rates at all. So that's it's kind of one of the the nice uh sectors to be looking at right now because of that interest rate neutrality. >> Making sure you have some of those neutral stocks in your portfolio is a great way to build wealth. I know that's your focus all of the time at the Oxford Income Letter is how to help investors build wealth over time and really have that solid, strong, and steady retirement. I know your monthly newsletter has so many incredible tips for investors just like that, talking about sectors, but also giving some specific stock recommendations. And there's a special offer for our viewers today. If you are watching this, you can sign up for Mark's Oxford income letter by scanning the QR code or clicking the link down in the description. this is a significant discount to join his monthly newsletter and really get some great education but also learn some of his favorite stocks uh before he shares them publicly with us here too. So Mark, thank you so much for sharing some of your knowledge and some of your favorite stock picks. Let's get into this list today of your top three healthc care stocks in this market right now. What is the first one that you were talking about? >> So I mentioned Madna and that is my pick for short-term. So I'm going to go short, intermediate and long-term healthcare stocks. So on the short term, uh I love Madna. The stock had a huge huge pop up over 100% on some strong data with Merc uh combining Madna's personalized mRNA imunotherapy with Merc's Katruda as a which is a cancer fighter and the results were strong in melanoma patients uh whose tumors had spread. So this is a you know this is a pretty serious indication here. melanoma that is aggressive is not a good thing and there's not a lot of treatments for it. So this is a an indication that they may have something in phase two. This is so let me backtrack. The results that that were recently released are phase three which is typically the last phase before submitting for FDA approval. In phase two the phase 2 results cut the death rate in half. Now, we don't have the actual phase 3 data yet, just that it was stat statistically significant and that they said it showed clinically meaningful improvement. So, we don't have the numbers yet, but the companies are telling us basically the news is good. So, when that news hit, the stock took off. And then if if we pull up a chart, we can see that Madna is carving out what would be I think a a classic bull flag pattern, which is a very bullish chart pattern where stock rockets higher uh and then consolidates for a little bit. And I mentioned earlier that Madna uh raised some money with convertible notes. They actually raised $2.6 billion. So not surprisingly, the stock came in a little bit on that announcement. It's been more or less trading water since then. But because it has started to break out of that bull flag pattern, that is a very very bullish indication and suggests that this stock could go very very high from here. Uh you know, we're talking about potentially uh 50 60 100 points higher. Uh it it could be a a very very big move. Like I said earlier with biotech you have to position size accordingly. You have to be able to handle extreme risk and with this big move that Madna already made. You have to assume that a downside move could be quite large too. So you know do take risk very seriously in this name but I am very bullish on it and I think the stock could could easily be in the 200s quite quite quickly. >> This stock story has been wild to watch. We I know talked about Madna uh when we talked about healthcare on the show almost a year ago and Kruda was talked about then when it was in the earlier stages of testing and the potential for this and I think when you're talking about investing in biotech you can get in early and and ride out volatility waiting for that payoff if that drug does pay off sometimes it doesn't sometimes it does and in this case it absolutely appears to be leaning towards it's going to and this is the kind of move that you can see in a stock chart but I know many investors who say well it already popped I don't want to get into a stock that's already popped like this. And I I want you to explain a little bit more about that short-term growth potential. Uh if this bull flag does happen and we do see that huge move higher, what kind of timeline? I know you said this is your short-term pick. What kind of timeline do you expect to see that really big pop happen again potentially in the future? >> So, I would want to see it happen quite quickly. you know, we're talking if it if it doesn't happen, let's say in a week or so, then that's a trade we would consider abandoning. When we're trading technically, especially shortterm, and we have patterns that that often repeat themselves, like a bull flag, which is a very reliable bullish pattern, if you're not seeing the outcome that you're expecting relatively quickly, uh then usually that means the trade is not going to work out. So, because we're looking at a daily chart, I would be expecting this to get moving within roughly a week or so. You know, if we were looking at a a weekly chart, then you'd obviously give it a little bit more time. But, uh, yeah, if if we didn't see this moving, let's say by September 10th, just to kind of pick a date that's not a line in the sand, but an approximation, you know, it's a about a week or two, then it would be time to move on to something else. >> Interesting. Yeah. And normally we talk to you only about these long-term investments. So I like to hear your take on some of these shorter term potential trades that investors could make. I do want to talk about this one and its long-term potential too. But before we get to the longterm on Madna, let's talk a little bit more about any short-term concerns you might have. I'm just looking at the short interest on this one and it is starting to tick up a little bit uh because it's in that short-term gain potential and like you said uh the downside potential is there too. Do you expect to see some more shorts or bets against the stock because of that huge pop it saw? >> I'm sure that will happen and that's fine with me. You know, when it comes to shorts, the way I was trained as an analyst, uh, when when there is, let's say, 10% or higher short interest, that starts to get really interesting to me as a as a bull. If I have a reason to be bullish on the stock, you know, that alone isn't the reason to be bullish. But if I am bullish and I see 10% or more short interest, then I get pretty excited because that can really set up a nice short squeeze. And if anyone's unfamiliar with a short squeeze, it's when stock goes higher and the shorts are forced to cover to avoid more losses. And so that extra buying by the shorts that are covering adds to demand for the stock and sends it higher still, which makes more shorts cover. And it's, you know, it's kind of a cycle. Uh, and and it's why it's called a squeeze because it it really squeezes the shorts as they all kind of come flooding into the market to avoid losses or take their short positions off the table. So, when I see a stock like Madna that has set up really nicely from a technical perspective, has, you know, good news that it just reported, hopefully more good news is coming, uh, but has that big short interest. that could be part of the recipe for why this stock would continue higher into the 200s. >> All right, let's look at this one and its long-term potential, too. You're talking about it today as your short-term pick, meaning this is one to look at in the next week or so. But if you're an investor looking at Madna for what kind of returns it could bring you 5 years down the road, uh what do you think about getting in right now? Or do you let the dust settle a little bit if you're an investor who wants to look at MADNA more long-term and not for just those short-term moves? >> Yeah, that's a a really great question. If if I was interested in Madna long-term, then I would probably want to at least start a position, maybe not take the full position at this moment because, you know, the stock did just have this strong move higher. Now, I'm obviously expecting it to continue higher in the short term, which I think why you'd want to at least have part of a position now if you're interested in for the in the long term. That way, in case it just runs and and never looks back, at least you have some exposure to the stock. Um, but I I don't think I would, you know, empty both barrels into it right here. There's still a lot of news to come, including this phase three data, which as I said is has been indicated to be quite positive, but there are times where stocks and especially biotech stocks will sell off even on positive news when that news is widely expected. So, you know, sometimes stocks explode higher on on the positive clinical trial data news. Other times when it's widely expected, the stock might sell off. people might take their profits then. So that's why I wouldn't I wouldn't go full on into a long-term position right here, but I I would take a nibble at least if you're interested in the long term and then see if you can get better buying opportunities in the future. >> All right, this is such an interesting name and I know we're talking about it from an investing standpoint, but I think it's an an exciting name just for healthcare in general. Uh breakthroughs like this are great to see. And so as an investor, if you're excited about that too, sometimes it can maybe feel good as an investor to get involved in something that's a a truly life-changing drug for many people, too. I always like to mention that about biotech because it pops up in my mind anyway. >> Yeah, it is it is one of the the really nice things about the sector is you can own Walmart stock, for example. There's only you can only get so excited about same store sales every month, but when a company comes out with a new melanoma drug uh that really has potential to help a lot of people and save a lot of lives, that's that is pretty exciting. >> And it's it's one of the reasons why biotech uh trades so emotionally as well because of that factor. >> Yeah, absolutely. Emotions involved in biotech and that's why we do see a lot of ups and downs. But I do think as investors, it's fun to be a part of something uh like this that could be a huge breakthrough. So, a great first stock to talk about. Again, that's your short-term healthcare pick. Let's move on to that second healthcare stock that you were looking at. And I know this is one you're looking at for kind of midterm gains. >> Yeah. And this is one I think most people will not have heard of. The name of the company is Farvaris. Ticker symbol is PHVS. And what attracted me to this company is they have a phase three trial data coming due pretty much any day. It's expected by the end of the third quarter. And the name of the drug is ducrectant and it's for a rare disease called hereditary angiodma also known as h ae. And this disease is very rare. Uh I believe it affects only about 20,000 people in the United States and Europe. Uh it's life-threatening and it causes severe swelling in the face, neck, abdomen, and extremities. So the phase 2 results were very very strong. It reduced attacks by 85%. Now, this is really significant because it's an oral medication and it matched the efficacy of injectable drugs. So, you're much more likely to stick with a a treatment if it's oral versus if you have to go give yourself a shot or go to a facility to get a shot. So, uh that's a a very very big deal. And this oral medication blew away the 44% rate of the only other approved oral medication for HAE. So if that data for the phase three data is strong, and I mean I I think it doesn't even have to be 85% the way it was in phase 2. If it just beats the oral medication uh that's out there, that could be a big gamecher for patients. And so I I think that has, you know, a near-term catalyst. But going beyond that, there has been a lot of merger and acquisition activity in the HAE space. Uh, and you know, this is a small company. Farvaris is about a $2.4 billion market cap. So, it's not hard to imagine a larger biotech company coming in and and buying the buying Farvveris to achieve this growth if the the drug is proven safe and effective. We saw back in April, Cal Vista was acquired at a 40% premium. Uh, they were in the HE space or they still are. uh last October a company called Astria was acquired for a 53% premium for their injectable HA drug. So you know you never buy a company because you think it will be acquired but it's kind of a nice thing to have in your back pocket that there is activity in the space and these companies have been going for pretty significant premiums. >> Yeah, I think looking at that near-term catalyst is a really good potential for this one. But I also think just looking at some of this the stats behind this one, tons of institutional ownership. Uh, Wall Street is absolutely buying into this name right now and I think that means something for investors looking at that. Also, looking at analysts, I know you don't always pay attention to what the analysts have to say. They do seem fairly bullish on this name, too. Does that give you any more confidence in the stock at all? Uh, >> I like that Wall Street is buying the stock that the the mutual funds, the hedge funds are buying it. That gives me comfort for sure because especially in biotech you tend to have very specialized investors uh people who really know the space. Obviously they don't bet a thous bad a thousand but they tend to know what they're doing and they tend to get into some of these companies fairly early. So the fact that they're buying now especially when it's it's a little bit later in the game gives me a lot of confidence. As far as the sellside analysts uh no as you mentioned I don't put a lot of faith in their recommendations. they're very often uh you know a little late to the party. So I don't I don't worry about it if if they're all saying buy on a stock I like. I prefer if they have hold or sell ratings because that way when they upgrade the stock uh it can serve as a catalyst. But uh the fact that they are bullish doesn't doesn't bother me too much. I'm more interested in the fact that Wall Street is actively buying the stock and and and you can you know see it in the stock chart too. If you pull up this chart, the stock has been just steadily moving higher since about April. And it in in June, beginning of the summer, it crossed an important line of resistance at about $32. So that's a a pretty strong indication that, you know, some psychology in the stock has changed where in the past this $32 level is where the stock kind of got stuck and now it it broke right through there. So, you know, I like it from a fundamental perspective and I really like it from a technical perspective as well. >> All right. So, for this one, I think the next question for investors is we've reached that that critical point of resistance. We've crossed that point. How much growth do you think could still be ahead for this name? Is this going to be one of those higher growth story potentials in biotech or more of that slow and steady returns? >> I think the phase 3 data will be a very important catalyst. So, you could see a pop on the on the news if it if it's strong. Uh and like I was saying about managing your risk, if the data is disappointing, the stock will probably fall pretty hard. So again, position size accordingly and and and take the risk seriously. Uh if it does work out and and the stock pops, uh you know, I would expect it to continue to go from there, they as often uh biotech companies do, they may raise money. So you may see a little bit of a a retracement if they sell stock in order to uh to you know fill their coffers a little bit ahead of a launch. And like I was saying it you know these HE companies have been getting acquired 40 50% premiums. So, with the stock trading, let's say around $34, $35, breaking through resistance, if the if the news is positive, I could certainly see this trading at $50 or higher within a year. You know, biotech is a little unpredictable. When when something really catches the eye of Wall Street, you know, particularly in the biotech sector, these stocks can go on insane runs. So, uh, that would, you know, with good news, I'd say $50 would probably be my minimum target. >> Now, with the first one that we talked about, that was more of a in the next week, you should be looking for a move. Uh, what's the timeline for you when you talk about midterm growth story? How how long of a time horizon are you looking at? >> Well, so Farvveras should be releasing this data by the end of the by the end of the month. They said the end of the third quarter. So, that implies by the end of September. So, that should be the big catalyst. Again, assuming that the news is good. You know, when I look at a stock intermediate term, uh, which is how I'm looking at faras, I'm thinking about a year out, maybe a little bit longer. We're not actively trading this name. This isn't something that, you know, I'm looking to to just scalp profits in a week. This is a a stock that I'm hoping to uh to hold for a year or more. >> Yeah, I know those are exactly the kind of timeline strategies that you share in the Oxford Income Letter, too, in your newsletter with all of your subscribers that you have. I know many people have learned a lot and helped to grow their retirement by following you every month with your newsletter. If you want to sign up and learn more from Mark, again, he's offering a special offer just for our viewers who have uh enjoyed listening to him here on Market Beat. It's a significant discount if you do want to sign up and join the Oxford Income Letter and get these stock tickers and Mark's strategy and his timeline for when he's getting into some of these names. Scan the QR code or click the link in the description. Again, this is a great way to get ahead of the market and also plan for solid retirement growth. That is what Mark and his in and his newsletter are all about. All right, Mark, let's get on to the last one. And this is definitely more the wheelhouse that I'm used to talking to you about, and that's kind of that long-term growth story, which is the healthcare name you're looking at there. >> Probably my favorite name in healthcare, especially for those seeking income, is ABV, ticker symbol is ABBV. This is the drug giant. and it was spun off from Abbott Labs back in 20 in 2013. They've raised their dividend every year since they began paying one in 2013. Uh right now the yield is is 2.7% so it's it's not super high, but uh that's because the stock has just been an incredible performer, but like I said, they do raise their dividend every year. But this is a a company that people just have doubted since day one, and all it does is prove the skeptics wrong. when when they were spun out, they had the largest selling drug in the world called Humira and it was going to be going off patent soon and that was the knock on this company. Everybody said, "Well, once they go off this drug goes off patent, their revenues are going to dry up and and the company and the stock's going to be in a lot of trouble." So, first of all, it took a lot longer for there to be generic competition than anyone expected. But, you know, this was not a company that was just sitting back on its laurels and waiting for the humira money tree to dry up. They continued to develop new drugs. They acquired new drugs. So, they have a ton of blockbuster drugs. Blockbuster is considered a billion dollars a year in revenue or more. Uh, and and Humira actually is still $3 billion a year and it's steadily declining because it is facing that generic competition, but it's it's not nothing. Meanwhile, they have Skyrizzy, which is one of the largest selling drugs in the world. Uh, it's for pediatric plaque psoriasis. They just filed for European approval for Crohn's disease. This is a 20 billion a year drug. They've got Renvoke for arthritis, eczema, and Crohn's. That's 9 billion. They've got uh Vilar, which is for depression, and bipolar disorder, 4 billion a year. Their Botox therapies for migraines is 4 billion. They've got cancer drugs that are blockbusters. Uh so they have 12 names that generate a billion dollars a year or more in revenue. They have a very very deep pipeline. Uh earnings are projected to grow double digits through 2029. They generate 18 billion a year in cash flow. So it's a a cash flow machine. And the company since it since it spun out from Abbott has grown at a compound annual growth rate of 16% over the last 13 years. And that's actually picking up over the last three years. the compound annual growth rate is 20%. So, you know, this is not just a, you know, a legacy drug company that that has a bunch of drugs that that are just uh like I said, sitting on its laurels and and collecting the money. They are constantly evolving, constantly growing, both organically, meaning they're developing drugs on their own, and they're acquiring companies that pay off uh they have a very good track record of acquiring companies that generate blockbuster drugs as well. So this is a stock I think you you hold for for a long long time, you know, for a decade or more as long as they continue to do what they have been doing. >> Yeah, Mark, I'm first very impressed with your ability to pronounce all of these drug names. I always wonder who comes up with these names because they're difficult to say, but you did a great job with all of those. Another thing I think that stands out looking at Abby is uh this is in a very different position uh financially looking at their their earnings than the first two companies we talked about. The first two we talked about and what you often see in biotech are pre-revenue companies that are just doing a lot of cash spend trying to develop the drug versus ABV which is already generating an incredible amount of income. Does that really put this in a different class than the first two names that we talked about? >> Oh, for sure. Because the other two are speculative. You know, Madna, as I mentioned, as soon as the stock popped, they raised over $2 billion uh in cash by selling convertible notes. You'll often see that with biotech companies that are not profitable. You know, AVY, like I said, it generates 18 billion a year in cash flow. So, it really does not have to sell stock. It doesn't have to uh, you know, raise debt in order to get the cash that it needs because, you know, the machine is is just generating cash on its own. So, uh, it's a very very different story. You know, Madna, Farvveris are more speculative. Abby is is hardly a speculative company. It is a blue chip pharma company and you know they like I said they've been raising their dividend for 13 years in a row. So this is a completely different type of investment. Like I said this is the kind that you buy for the long term. You collect those dividends. Those dividends go up every year and and the stock has has also performed incredibly well. It's not just it's not just that you're collecting this dividend. The stock has done really really well. And actually if you look at the chart on this one too on a long-term chart, it looks fantastic. This is a stock that's gone uh since the uh the lows from the pandemic has just been in a really nice uptrend and also kind of like we said Farvaris broke through resistance few months ago at about $240. And if you look at the chart back in 2025, early 2026, every time it hit around $240, it got rejected, came back down. The fact that it it burst through $240 is a very very bullish sign. And so, you know, I expect this uptrend to continue and and perhaps even accelerate. That to me, that's what the breaking through this resistance at 240 is telling me. >> Yeah, this is incredible performance to be up 22% in the last 3 months. I know this name did come up um we weren't talking about healthcare stocks as a as a group. This came up as a a good buy the dip opportunity back in April, May, that that springtime when AB was under $200. And we had an analyst from Marketabbe talking about how this is an incredible value buy at an under $200 rate. And so I think for the question for investors right now, if you didn't get in on AB when it was under 200 and it's now up around that 240, is it still a good entry point if you are a long-term investor who's looking at growth in AB, you know, 10 years down the road, not in the next 3 months? >> Yeah, I think it is. You know, like I said, they are expected to grow earnings double digits through 2029. that dividend is going to increase, you know, every year presumably for the foreseeable future. They still have a a pipeline full of drugs that could become blockbusters. They're in, you know, they're still growing many of their existing blockbuster drugs. So, this is this is very much a growth story. Uh that's, you know, also happens to be a great dividend payer, >> right? And that is for sure what we love to talk to you about is earning income while investing. Again, that is Mark's specialty. Check out his newsletter. I really It's a great place to learn how to grow your wealth, compound your wealth over time, too. And that is something that Mark teaches in the Oxford Income Letter. Again, we've got that link in the description if you want to sign up to learn more from Mark. We only get to hear from you once a month, Mark. It's not enough. I love our conversations. Thank you so much for sharing uh some great stocks with our viewers today and also a lot of good education like you always do, too. If you want to hear more from Mark, he was on last month. We talked about a very different sector. That's another thing I love is we get to hear your take on a lot of different things.