Biotech has strongly outperformed the S&P 500 since January of 2011. The NASDAQ Biotechnology Index (NBI) is up 90%, and the AMEX Biotechnology index (BTK) is up 50%, versus the 28% gain for the S&P 500. Despite the outperformance, the analysts at Deutsche Bank A.G. (NYSE: DB) believe there are still gains to be had. They conducted a detailed relative valuation and fundamental analysis. From this analysis, they think biotech is not a bubble and still believe the sector is a Buy.

They point to five specific reasons for this conclusion:

1. Recent outperformance in past two years was recovery from prior year weakness.
2. Biotech has been outperforming S&P only since the first quarter of this year.
3. Despite price-to-earnings expansion, multiples are well below precrisis levels.
4. Current multiples look significantly below the last known bubble.
5. Current multiples also are well below the average price-to-earnings in the period from 2005 to 2008.

Even though biotech currently trades at a 50% premium to the S&P 500, the Deutsche Bank team has a list of solid stocks to buy now.

Amgen Inc. (NASDAQ: AMGN) is a top stock to buy at Deutsche Bank. With a gigantic pipeline and solid earnings growth, this biotech leader is poised to succeed for years to come. Deutsche Bank has a $115 price target. The Thomson/First Call estimate is also at $115. Investors receive a 1.80% dividend.

Celgene Corp. (NASDAQ: CELG) hit a new 52-week high yesterday. The company recently reported  data from its ongoing phase III trial of apremilast this month, showing the drug successfully reduced psoriatic arthritis symptoms by at least 20% versus a placebo. Deutsche Bank has a $143 price target. The consensus target is at $140.

Biogen Idec Inc. (NASDAQ: BIIB) is another massive mega-cap name that makes the list of stocks to buy. Biogen Idec discovers, develops, manufactures and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders in the United States and internationally. The Deutsche Bank target for the stock is $240 and the consensus estimate is $226.

Gilead Sciences Inc. (NASDAQ: GILD) has been recording good growth numbers. The market is apparently anticipating further increases in earnings in the future, given the higher trailing price-to-earnings ratio. The Deutsche Bank price objective is $69 and the consensus is lower at $63.

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is another name that has been on a huge roll. Regeneron is an integrated biopharmaceutical company that focuses on development of new candidates for serious ailments primarily in areas like ophthalmology, inflammation, cancer and hypercholesterolemia. Deutsche Bank has a $310 target, while the consensus is at $288.50.

Onyx Pharmaceuticals Inc. (NASDAQ: ONXX) is another company with huge momentum. For its most recent quarter, Onyx delivered a doubling in revenue to $145.5 million from $72 million in the previous year, with practically all the gains coming from their multiple myeloma drug Kyprolis. The Deutsche Bank target price for the stock is $105. The consensus is $106.

Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) is a leader in the fight against hepatitis C (HCV) infection. The company also has a groundbreaking drug for the treatment of cystic fibrosis. Deutsche Bank has a $100 price target for the stock. The consensus is at $93.

Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) has also been on fire lately. Soliris, its lone drug approved by the Food and Drug Administration, saw sales rise by 38% to $338.9 million in its most recent quarter, as non-GAAP net income jumped 49%. The Deutsche Bank target is $117 and the consensus is actually higher at $120.50.

Investors that buy any of these names are immediately becoming momentum players, looking to buy high and sell higher. Each of the Deutsche Bank stocks to buy either has a tremendous portfolio and pipeline or a blockbuster drug that dominates its niche. These stocks may represent the best bets that the biotech sector has to offer.

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