Shares of biotechs (^NBI) are up more than 23% so far in 2014, but the sector has long had a reputation for being “risky” with many companies still unprofitable.

But that doesn’t mean there aren’t good investments in the sector – especially if you stick to bigger cap stocks, says Joe Fahmy, managing director at Zor Capital.

“It’s one of my favorite sectors right now,” Fahmy said, particularly when you compare it to other sectors. “Beneath the surface, a lot of stocks are correcting,” he said.

“For example, energy, with oil coming down, was a strong sector but that’s being held back. But right now I'm noticing as individual stocks are pulling back, biotech across all market caps is holding up really well.”

But that doesn’t mean he’s investing in biotechs across the board. He sees smaller caps as being riskier buys than larger cap stocks.

“[Smaller caps] are difficult and I stay away from them for the most part,” he said. “But for the bigger cap ones with a pipeline of drugs and .. there’s a lot of earnings power behind them. These are growing at 30, 40, 50% and at the end of the day that’s really what’s gonna fuel these stocks higher is their earnings and sales growth.”

Biotechs have been in the spotlight lately primarily as takeover targets, but that isn’t the only play, said Fahmy.

We asked him to name specific picks and he pointed to Regeneron (REGN), Amgen (AMGN), Celgene (CELG) and Gilead Sciences (GILD).

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