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(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — One of the primary purposes of keeping this Best Stocks in the Market List is to help us keep our biases in check. For example, my attitude toward the biotechnology segment of the stock market these days can be described as “extreme apathy.” I simply do not have time for the names in this group. The industry isn’t working, hasn’t been working, and has represented a massive opportunity cost versus the major averages over the last few years. But that’s just my bias talking. It’s informed (I have the data), but it’s a bias nonetheless. In the meantime, there is a small number of biotechs on our list, two of which we’ve written about for CNBC Pro already and one that we should have written up much earlier. You may recall our column from June in which we talked about Gilead Sciences and Alnylam Pharmaceuticals . Both are still included in the Best Stocks list. ALNY has become an incredible winner, up 50% since the day of our write-up. GILD is more of a work in progress, up 5% since in a very tough tape for anything health care. The one we neglected to mention, Insmed (INSM) , is the biggest winner of the three. Sometimes it just works out that way. Sean and I can only cover so many names for you each week. We’re trying! In today’s update, we’ll do an overview of the list and then hit these lonesome three biotech names that have transcended all other stocks in their sector to be among the very best in the U.S. stock market this year. Sector leaderboard As of Aug. 18, there are 182 names on The Best Stocks in the Market list Top sector ranking Top industries Top 5 best stocks by relative strength Sector spotlight Sean — We wrote up a piece on GILD and ALNY in early June. Both stocks are still on the list, and we got another entrant in INSM, rounding out our biotech exposure. Below is the most well-known biotech ETF, which happens to have all 3 of our stocks in its top five holdings: You can see this group of biotechs has ripped off its “liberation day” lows. They just bounced off their 50-day moving average and broke right through their 200-day moving average. The sector is gearing up for a golden cross, assuming we continue trending higher. Biotech stocks have historically shown resilience and even outperformance during Federal Reserve rate-cutting cycles, benefiting from a valuation boost and improved funding conditions (as most capital-intensive businesses do). Because many biotechs generate most of their cash flows in the future, lower interest rates reduce discount rates and increase the present value of those expected earnings. While biotechs generally like rate cuts, the three stocks on our list are in slightly different breakout phases. We were late on Insmed (INSM) You can see this stock is ripping, up 95% over the past three months and up 16% the past week. On Aug. 12, Insmed announced the Food and Drug Administration approved Brensocatib, the first and only treatment specifically for non–cystic fibrosis bronchiectasis, a chronic lung condition. This approval sparked immediate investor enthusiasm, driving the stock higher. Alnylam (ALNY) was a home run We wrote this one up on June 9; the stock is up 48% from that day. Alnylam delivered stellar second-quarter results, far exceeding expectations. Revenues were up 64% year-over-year. The company received regulatory approvals in the European Union, Brazil, UK, Germany and Japan for their cardiomyopathy treatment. We noted the FDA approval in the U.S. as a tailwind for the stock. It’s still early for Gilead (GILD) The stock has been trending nicely, up a reasonable 5% since we wrote them up in June. They reported earnings in early August, beating on both lines and raising guidance for the full year. Gross margin improved from 78.7% to 87% and they authorized a new $6 billion share repurchase program along with a 79 cent per share dividend. Risk management Josh — Gilead is the world leader in treating HIV, and its newest approved drug, Yeztugo, got a special shoutout during the earnings call on Aug. 7. Yeztugo is a twice-a-year injection used to prevent HIV, and CEO Daniel O’Day said the first prescription was written within hours of launch — and the first dose was delivered within days. The company is expecting 75% U.S. insurer coverage within six months, and 90% coverage within one year. This, along with other positive developments in the company’s pipeline as well as the affirmation of full-year guidance, should support the current rally. GILD found overhead resistance at $120 — precisely where you would have expected it to — as some of those who bought at these levels back in March lighten up just in case the stock fails again. I’m willing to give GILD the benefit of the doubt. I think it trades through $120 and can stay there. Especially if the biotech’s long and miserable downtrend is finally being snapped as Sean has shown above. GILD won’t give you the maximum bang for your buck in a biotech bull market, but it’s been a sector leader and should hold its own. This name has been above its 200-day at all times over the last 12 months (see above). Traders can use $110 for risk management, investors can trail it with a 200-day simple moving average, currently around $102 – I’d keep updating that stop at the end of each week. So long as the sector is in comeback mode and GILD hangs near highs, I’d want to be long. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC” TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
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