If you’re looking to simplify your investment strategy, consider investing in stocks of highly profitable companies with robust growth potential. Three contributors from The Motley Fool have highlighted a few such stocks. They believe Eli Lilly (2.11%), Novo Nordisk (1.19%), and Vertex Pharmaceuticals (0.52%) are excellent healthcare stocks to purchase in September.
The Ever-Expanding Growth Engine
David Jagielski (Eli Lilly): Eli Lilly consistently provides investors with reasons to be optimistic about its extensive growth opportunities. The focus currently is on the expanding potential of tirzepatide, the key ingredient in its type 2 diabetes and weight loss medications, Mounjaro and Zepbound.
On August 20, Eli Lilly shared results from a phase 3 study on tirzepatide, underscoring its transformative potential in the healthcare sector. Over a 176-week period, participants who were prediabetic and either overweight or obese saw a 94% reduction in their risk of developing type 2 diabetes, thanks to weekly tirzepatide injections.
This significant risk reduction could drive increased demand for Mounjaro, which has become Eli Lilly’s leading blockbuster drug. In the last quarter, ending June 30, its revenue surged to over $3.1 billion, more than tripling from $980 million in the same period the previous year.
Eli Lilly is just beginning to roll out Zepbound and Mounjaro to patients and explore the drug’s broader benefits. As more indications are discovered, doctors might find numerous reasons to prescribe it. While weight loss is a major attraction for patients, the potential to lower risks associated with diabetes, heart failure, sleep apnea, and other obesity-related issues could lead to broader insurance coverage for tirzepatide, unlocking further growth avenues for Eli Lilly.
With its vast potential, Eli Lilly’s stock is a clear choice for investors, as its sales and profits are expected to soar in the coming years.
Still Time to Join the Growth Trajectory
Prosper Junior Bakiny (Novo Nordisk): One of the challenges in stock investing is determining the right time to buy shares. While the mantra is to “buy low,” sometimes it makes sense to invest in a stock even after a significant rise. When a stock has strong prospects and is expected to continue outperforming the market, any entry point can be considered favorable. Novo Nordisk appears to be on such an unstoppable growth trajectory.
Sales for its primary growth drivers, Ozempic (for type 2 diabetes) and Wegovy (for weight management), have been climbing rapidly. Novo Nordisk seeks to obtain various label expansions for these drugs, enhancing their sales potential. These achievements are not mere luck. With nearly a century of leadership in the diabetes drug market and pioneering in the GLP-1 receptor agonist space, Novo Nordisk is now at the forefront of the burgeoning weight loss market. While many companies aim to compete, few succeed.
Among its promising developments is Cagrisema, a GLP-1 medication projected to generate $20.2 billion in revenue by 2030. Currently in late-stage testing, Cagrisema is not the only promising candidate in Novo Nordisk’s pipeline, which includes several other potential weight loss treatments and drugs targeting different areas. Novo Nordisk’s strategy to diversify its offerings is gradually materializing as it develops treatments across various diseases. The company’s portfolio is set to become more diverse over the next five years.
One constant is Novo Nordisk’s ability to generate substantial revenue, earnings, and superior market performances, making it a smart choice for healthcare investors.
Six Compelling Reasons to Invest in This Biotech Stock
Keith Speights (Vertex Pharmaceuticals): Vertex Pharmaceuticals currently boasts the blockbuster drug Trikafta/Kaftrio in its portfolio. This cystic fibrosis (CF) treatment is on track to exceed $10 billion in sales this year. However, there are six additional reasons to consider investing in this biotech firm.
First, there’s Casgevy, the first CRISPR gene-editing therapy available. It does more than treat sickle cell disease and transfusion-dependent beta-thalassemia—it cures these rare blood disorders. Vertex envisions a multibillion-dollar opportunity with this product.
Awaiting regulatory approvals are the second and third reasons to invest. The U.S. Food and Drug Administration (FDA) has set a PDUFA date of January 2, 2025, for an approval decision on Vertex’s latest CF therapy, a triple-drug combination including vanzacaftor. Additionally, the FDA’s decision on suzetrigine for acute pain treatment is expected by January 30, 2025. If approved, both drugs are likely to become blockbusters.
The fourth and fifth reasons require more patience. Vertex is conducting pivotal studies on two other drugs. Inaxaplin targets APOL1-mediated kidney disease, affecting approximately 100,000 people. Meanwhile, povetacicept is a “pipeline-in-a-product” aimed at autoimmune kidney diseases.
The sixth reason to buy Vertex is its early-stage pipeline. Notable are VX-880 and VX-264, both islet cell therapies with the potential to cure type 1 diabetes.
Vertex doesn’t need all these programs to succeed to see significant growth over the next decade, though I anticipate many will. In my view, the stock is an unequivocal buy.
