It's not fun missing out when a hot stock goes wild. The viral popularity of injectable diabetes and weight loss drugs, called GLP-1s, propelled pharmaceutical stock Novo Nordisk to over 350% in returns over the past five years. That sizeable return beat the broader market by a comfortable margin.
But you needn't worry if you feel that you've missed out. The great thing about investing is that another pitch always comes across the plate.
There are two promising healthcare stocks on the market right now, with potential catalysts that could ignite market-beating returns, similar to what Novo Nordisk shareholders have enjoyed. These companies have some risks, but their potential upside makes them worth considering swinging at.
1. CRISPR Therapeutics
The catalyst: The company's first product hitting the market.
CRISPR Therapeutics(NASDAQ: CRSP) isn't a new company. It went public in late 2016 in its bid to perfect and commercialize Clustered Regularly Interspaced Short Palindromic Repeats, or CRISPR for short. CRISPR is a gene-editing technology that could help treat or cure genetic diseases.
Following the company has been like watching paint dry due to the lengthy development and FDA trial processes. However, CRISPR is finally poised to start making money after the FDA approved its first product, a joint venture with Vertex Pharmaceuticals to treat sickle-cell disease.
Analysts estimate CRISPR Therapeutics will generate just $55 million in revenue this year but see sales surpassing $1.1 billion in 2027. Additionally, the company has a pipeline of products in development, including five products in clinical trials for applications related to type 1 diabetes, cardiovascular disease, autoimmune disease, and cancer treatment. CRISPR's long-term investment upside will depend on how successfully the company wins FDA approval for new products. Most fail, even if they make it to clinical testing.
However, a couple of home runs could make the stock a grand slam for long-term investors. The stock is nearly 80% off its high because investors aren't as willing to pay up for unproven companies as they were during the market bubble in 2021.
CRISPR's market cap is just over $4 billion today. Still, many of the world's largest pharmaceutical companies started small and blew up once they successfully developed a game-changing product. Whether CRISPR Therapeutics can follow that trajectory remains to be seen, but the potential reward makes the stock a worthwhile idea for risk-seeking investors.
2. Hims & Hers Health
The catalyst: Surging growth, with (or without) GLP-1s.
Telehealth was a popular investing theme during the pandemic. Some companies, like Teladoc, haven't lived up to their former hype. However, Hims & Hers Health(NYSE: HIMS) has delivered -- and then some. It offers digital healthcare consultations and sells treatments for various conditions, including sexual health, weight loss, mental health, and hair loss.
Hims & Hers has grown its subscriber base from 391,000 in Q1 2021 to 1.86 million in Q2 2024. The company generated some controversy recently by selling compounded treatments containing semaglutide, the active ingredient in Ozempic. A shortage has enabled compounding pharmacies to create products despite active patents protecting the brand-name versions.
The uncertainty about whether Hims & Hers will be able to sell compounded GLP-1s as these shortages eventually end has clouded the stock and weighed on the share price. Management asserted in the company's Q2 earnings call that it plans to continue selling compounded semaglutide, but it's a gray area that could become litigious.
Despite all the attention GLP-1s get, the market may overestimate their role in the company's success. Hims & Hers only began selling GLP-1s in May. The company grew its total sales by 52% year over year in Q2 to $315.6 million, with only about $15 million coming from GLP-1 sales.
Hims & Hers is already doing well. What will happen if the company successfully keeps its compounded semaglutide on the market? Instead of a make-or-break situation, GLP-1s could be the icing on the Hims & Hers cake.
Still, Hims & Hers will probably be fine if it loses access to the compounded products. The company launched a separate category of weight loss treatments in December 2023 that management predicted will already do $100 million in sales in 2025.
Hims & Hers has declined recently and sits at a market cap of under $4 billion today. However, the stock could do big things once Wall Street focuses more on the company's rampant, profitable growth versus one minor aspect of the company.
Should you invest $1,000 in CRISPR Therapeutics right now?
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Justin Pope has positions in Hims & Hers Health. The Motley Fool has positions in and recommends CRISPR Therapeutics and Teladoc Health. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
