2 Biotech Stocks That Could Go Parabolic

Biotech stocks have taken a beating to start the year, with the S&P Biotech Industry Index down more than 49% so far. That doesn't mean that investors should give up on the sector, however. These stocks are known for volatility because all it takes is one blockbuster drug to uplift a biotech company's fortunes. With biotech shares down, this presents a good opportunity for long-term investors to find strong buys that could pay off handsomely in the long run.

There are several reasons a biotech stock could go parabolic -- that is, have its shares see a sharp rise in a short period. The company could be the buyout target of a merger deal with a larger pharmaceutical company. Positive news regarding a trial on one of the company's lead therapies could boost a stock's shares, especially when the Food and Drug Administration (FDA) approves a drug. And even a surprisingly strong earnings report could send its shares jumping. 

Axsome Therapeutics (NASDAQ: AXSM) and Clovis Oncology (NASDAQ: CLVS) are two biotech stocks that have the potential to go parabolic, even in a down market.

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Source Fool.com