Pharmaceutical stocks fell about 8.1% in the first six months of 2020. Still, there are standouts in the pharma group. The best pharmaceutical stocks to buy have several common features, including strong Composite Ratings and Relative Strength Ratings.
The industry group comprised of 33 pharma stocks ranks No. 90 out of the 197 industry groups tracked by Investor's Business Daily. But that has fallen over several months. Just 13 weeks ago, the industry group ranked No. 41, with No. 1 being the top rating. Biotech stocks rank No. 13.
But there is an art to buying stocks. So which are the best pharmaceutical stocks to buy and watch now? In early July 2020, here's the cream of the crop.
Pharmaceutical Stock With A High Composite Rating
The best pharmaceutical stocks to buy and watch have high Composite Ratings. The CR measures a stock's overall strength. A best-possible CR of 99 means a stock is performing in the top 1% of all stocks in terms of key growth metrics. Just one pharmaceutical stock lands in the top 10% of all stocks.
Bristol Myers Squibb leads the industry group after wrapping up its acquisition of Celgene. Shares have a strong Composite Rating of 96. Bristol Myers' biggest products are cancer drugs Revlimid and Opdivo, and blood thinner Eliquis.
But it's also important to keep chart patterns in mind when looking for pharmaceutical stocks to buy.
Shares of BMY stock are currently consolidating with a buy point at 65.44. Previously, shares broke out of a cup-with-handle base with an entry at 63.28 on May 12.
(Related: Check out these stocks near a buy zone.)
Relative Strength Among Pharma Stocks
A larger number of pharma stocks have strong Relative Strength Ratings. The RS Rating considers stock performance over the past 12 months. Just two pharma stocks land in the top 10% of all stocks in terms of 12-month RS performance. Both of those trade in low volume, so proceed with caution.
The largest among them is Protagonist Therapeutics which also has a leading Relative Strength Rating of 97. Protagonist is working on peptide-based treatments for inflammatory bowel diseases and for rare blood disorders.
Pharmaceutical stock Kadmon Holdings also has a Relative Strength Rating of 90. But Kadmon stock trades well under 10 per share.
Neither Protagonist nor Kadmon are forming definitive chart patterns.
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Follow Allison Gatlin on Twitter at @IBD_AGatlin.
