The Captain’s Column – April

eToroFC Captain – Conor Houlihan

 

Conor discusses the exciting opportunities emerging in the gaming and pharmaceutical industries.

With uncertainty comes volatility and there is no shortage of uncertainty right now. We have trade wars, political unrest in South America, brexit negotiations, European countries flirting with recessions and an economic slowdown in China to name a few. That said, the markets have responded strongly to last December’s selloff having ripped higher in 2019. The reason for that is simply because there are a number of companies out there trading at very reasonable prices right now and none of the macro-economic issues are yet set in stone. Despite the recent rally, there are still huge opportunities to pick up undervalued stocks in the gene editing and gaming sectors.

Top videogaming companies have been losing customers to Epic Games’ Fortnite. No doubt this fad will lose steam sooner rather than later and the next big hits could easily (in fact most likely) come from either Take Two, EA, Activision or Ubisoft. We’ve already seen how fast these stocks can take off when EA jumped 16% in a single session back in February after they released solid engagement figures for new game “Apex Legends”.

Reuters Graphic

Another area of the market where I think you can find significant value right now is in the biotech sector. This year we should begin to see results of the first clinical trials for CRISPR gene editing candidates from CRISPR Therapeutics, Editas Medicine and Intellia Therapeutics. The boom or bust industry tanked in the second half of 2018 as valuations boiled over and the bubble seemed to burst for the gene-editing trio. Fundamentally, nothing has changed yet we find these 3 companies trading more than 50% off their highs.

There has a been a broad rally across the sector over the past couple of weeks as big pharma companies have begun to show increased interest in acquiring gene editing companies. Despite this recent surge in the companies mentioned above, there is still a huge runway ahead as investors eagerly await the results of this year’s clinical trials.

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