Investing in beaten-up biotech stocks is usually a difficult proposition. Drug companies typically plummet after bad news -- a failed clinical trial or a Food and Drug Administration rejection, for instance -- making it hard for them to come back, especially since raising additional capital at the beaten-down price can cause substantial dilution of shareholders.
But with the biotech industry still well off its highs last year, it’s a little easier to find companies with plenty of cash that have been knocked down -- just make sure you don’t fall into a value trap during your hunt.
