With the global economy beginning to stabilize, the stock market is looking more attractive than ever. One industry that could stand to make huge gains in the near future is the pharmaceutical industry, though it’s worth noting that this sector is a high risk, high reward industry. Still, pharmaceutical stocks offer a great way to diversify your portfolio and add stocks with high potential. Yes, there are risks involved, but having some higher risk stocks in your portfolio can increase long-term growth potential.
This is especially true for start-up companies which offer the highest potential for returns, but also the greatest risk for losses. Some start-ups will make major breakthroughs and produce huge profits, other start ups will simply fail and fold. If start-ups aren’t your thing, you can invest in larger, more stable companies, such as Pfizer Inc. (NYSE:PFE), which have more diverse product line-ups and revenue streams.
You should also examine mid-sized companies that offer a good mix of reward and risk. Still, if a major lawsuit comes out, or a pivotal drug fails to pass clinical trials, stock prices can swing wildly no matter which company you are invested in.
A young, aggressive start up
One company that has the potential to produce strong future returns is Puma Biotechnology Inc (NYSE:PBYI). The company’s stock price has grown nearly 200% in the last year and it currently has a market cap of just over $1 billion. The company has plenty of room to grow, and with its primary product, PB272 (neratinib), now entering phase III of the trial phase, there is a chance that the stock could explode.
This will depend largely on whether PB272, a breast cancer treatment, proves effective, though early tests and research suggests that it will. If you are looking to add a high risk, high reward stock to your portfolio, Puma Biotechnology Inc (NYSE:PBYI) deserves a close examination.
A diversified multinational with growth potential
If you are looking for a safer company, Pfizer Inc. (NYSE:PFE) offers a chance to invest in a diversified multi-billion dollar company. With a market cap of just over $200 billion, Pfizer Inc. (NYSE:PFE) certainly doesn’t count as a start-up. Still, with a trailing P/E of 13.45 and a profit margin of nearly 27%, the company appears to be positioned for strong future growth.
Some investors might be wary of the $40 billion worth of debt, but Pfizer Inc. (NYSE:PFE) maintains $35.41 billion cash-in-hand. Pfizer Inc. (NYSE:PFE) also has several interesting new products in the market, including Xalkori, which has proven in trials to halt the worsening of lung cancer, and has thus far shown to be more effective than chemotherapy.