It’s often said that Mark Twain remarked: “The gold rush is an ideal time to be in the business of selling picks and shovels.”
Whether or not he actually said these words isn’t particularly significant. The main point is that there are often less apparent ways to benefit from situations when a popular new product is launched.
A prime illustration of this can be seen in the drug manufacturing sector In recent years, medications known as glucagon-like peptide 1 (GLP-1) agonists, including Mounjaro, have become more prominent. Zepbound have transformed the delivery of care for patients with diabetes and obesity. Eli Lilly are the producers of these highly successful medications , causing investors to drive the stock price up significantly over the past two years.
The potential for investment in the GLP-1 sector extends far beyond just pharmaceutical stocks. A particular company reaping significant benefits from the increasing demand for GLP-1 medications is Solutions by Jacobs ( J 0.26% ) .
Let’s analyze what Jacobs Solutions does and examine why the current moment seems like a promising opportunity to buy some shares.
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What services does Jacobs Solutions offer?
Jacobs Solutions operates within the construction industry, though not in the traditional sense. Rather than constructing homes, the company focuses on highly complex and time-intensive projects. construction and development initiatives including data centers, spacecraft, urban planning, and life sciences establishments.
NASA is among the company’s clients. P&G , and Bristol Myers Squibb is a pharmaceutical company. .
Photo credit: Getty Images.
What sets Jacobs Solutions apart from others?
In a recent conversation with CNBC’s Jim Cramer Jacobs’ CEO, Bob Pragada, offered a fascinating insight into the company’s significant involvement in the future of GLP-1 development in collaboration with Lilly.
The video above contains several key concepts that need to be explored.
Pragada describes the complexity of Lilly’s GLP-1 facilities, emphasizing that these projects are not easily accessible for various builders to bid on. Due to the limited competition and the high demand for Jacobs’ expertise, the company is well-positioned to have an advantage. pricing power for the services it provides.
Considering these dynamics, I would suggest that Jacobs has established a comparative a competitive advantage that protects a business from its rivals Additionally, a key advantage of Jacobs is that the company often secures ongoing contracts from its clients when they are in periods of growth.
Cramer suggests that Lilly might construct more factories in Asia and Europe if the demand for its GLP-1 medications justifies such an investment. If this occurs, Jacobs seems likely to secure this business in the future and indirectly benefit from the different trends driving its clients.
At present, it seems like an excellent chance to invest in Jacobs Solutions stock.
I can identify several reasons to consider purchasing Jacobs stock at the moment.
To begin with, the company has just revealed that it is spinning off its Critical Mission Solutions (CMS) division, along with parts of its Divergent Solutions division — in particular, the Cyber & Intelligence sector.
Pragada points out that divesting These non-essential assets will assist Jacobs in becoming “a more concentrated, high-profit company that is more in tune with major global mega trends.”
I consider these comments to be reassuring and view the spin-off as an indication that Jacobs recognizes the source of its growth and knows where it intends to keep investing.
According to JP Morgan the complete potential market TAM GLP-1 treatments in the U.S. alone could generate $100 billion by the year 2030.
In my view, these predictions suggest that the demand for GLP-1 will persist for a considerable period. Consequently, I am optimistic that Lilly will have to keep putting money into infrastructure. to balance supply and demand capabilities. Because of this, I believe Jacobs’ connection with Lilly has the potential to be transformative.
Apart from his involvement in the weight loss industry, Jacobs is also subtly contributing to different fields of machine intelligence artificial intelligence, as well as data centers and the manufacturing of electric vehicles.
At the time this article was written, Jacobs is trading at a future price-to-earnings ratio The price-to-earnings (P/E) ratio is 16.1. In contrast, the projected P/E ratio of the S&P 500 is approximately 21.7.
The company’s reduced price valuation compared to the overall market might imply that investors are not paying enough attention to Jacobs Solutions. Although the company may not be directly involved in selling groundbreaking drugs or AI software, these opportunities are still significant indicators for Jacobs, as it supports major industry leaders behind the scenes.
The long-run long-term favorable trends The growth in numerous markets where Jacobs operates, along with the company’s competitive advantage and fair valuation, makes it an attractive investment opportunity from my perspective.
Before purchasing stock in Jacobs Solutions, think about the following:
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