Many investors have a type of acrophobia (the fear of heights). It's not that they're worried about standing at the top of a ladder. Instead, their concern is focused on putting money in stocks when the market is skyrocketing.
Three Fool.com contributors think they've identified stocks that can allay investors' fears. Here's why they view Eli Lilly(NYSE: LLY), Novo Nordisk(NYSE: NVO), and Vertex Pharmaceuticals(NASDAQ: VRTX) as growth stocks you can buy right now without any hesitation.
Buy the dip on this leading pharma stock
Prosper Junior Bakiny (Eli Lilly): For those looking for top growth stocks to buy right now, it's a great time to consider investing in one of the best-performing healthcare giants in recent years: Eli Lilly. The pharmaceutical company is having its worst month in quite some time. Eli Lilly's shares fell significantly following the drugmaker's third-quarter results.
Evidently, growing its $11.4 billion in revenue by 20% year over year -- an otherwise excellent performance by a pharmaceutical giant -- isn't good enough. On the one hand, Eli Lilly did miss revenue and earnings estimates. The company also slightly cut its guidance for the full fiscal year.
However, those are merely details that long-term investors should look beyond. Eli Lilly's lineup features two incredibly fast-growing blockbusters: Mounjaro and Zepbound, which treat diabetes and obesity, respectively. While these two medicines are grabbing most of the attention, it's worth noting that some of Eli Lilly's older products are still contributing meaningfully.
In the third quarter, sales of the cancer drug Verzenio soared by 32% year over year to $1.4 billion. Newer products like Alzheimer's medicine Kisunla will eventually help drive growth. Further, Eli Lilly has one of the most exciting weight loss pipelines on the market -- that's the area practically every notable drugmaker is going after now.
Will Eli Lilly's valuation be a challenge? The company's forward price-to-earnings ratio still looks high at about 61. The average for the healthcare industry is 18.
Still, Eli Lilly's adjusted earnings per share (EPS) in the third quarter was $1.18, compared to $0.10 in the comparable period of the previous fiscal year. Analysts project that the company's EPS will grow at an average of 71.7% per year in the next five years. Eli Lilly's valuation isn't outrageous, considering its prospects. The stock is still one of the better growth plays in the healthcare industry, especially after its recent dip.
Novo Nordisk is a potential steal of a deal now
David Jagielski(Novo Nordisk): One stock that I wouldn't hesitate to buy today is Novo Nordisk. The Danish healthcare company is a leader in the anti-obesity market. While there will no doubt be plenty of competing GLP-1 drugs and weight loss products in the market in the future, Novo Nordisk will have the advantage of being one of the first movers.
Semaglutide has been on the market since 2017, and it is the active ingredient in the company's top-selling diabetes drug, Ozempic, as well as its weight-loss drug, Wegovy. With semaglutide having a longer track record and being on the market for several years, it can be a safer option for patients to consider than newer drugs, whose longer-term side effects may be less known.
Novo Nordisk is an attractive growth stock to buy and hold because the company is still in the early stages of rolling out Wegovy to international markets, and it's building out capacity to meet growing demand. And as it's doing so, its numbers look great. This year, the company is projecting its sales and profits to grow by more than 20% (up to 27% at constant exchange rates).
Investors can buy the stock at an incredibly modest 27 times next year's expected earnings (based on analyst estimates), which seems like a bargain buy, given how much more growth may be on the horizon for Novo Nordisk in the long run. Even though Ozempic has been on the market for years, it has still generated sales growth of 32% through the first nine months of this year. Wegovy, meanwhile, is on fire, with its growth rate up at 76%.
Novo Nordisk is one of the best growth stocks you can buy today.
Don't wait to buy this great biotech stock
Keith Speights (Vertex Pharmaceuticals): I expect 2025 will be a banner year for Vertex Pharmaceuticals. And things should get even better after that. Why? Let me count the ways.
First, Vertex awaits not one but two regulatory approvals early next year. The U.S. Food and Drug Administration (FDA) set a PDUFA date of Jan. 2, for an approval decision on the company's vanzacaftor triple-drug combo targeting cystic fibrosis (CF). The agency is scheduled to make a decision on suzetrigine in treating moderate to severe acute pain by Jan. 30.
I think both drugs will sail through the FDA's approval process. I also expect both to become huge commercial successes for Vertex. Second, the big biotech company's launch of Casgevy is still in its early innings. Sales for the first CRISPR gene-editing therapy on the market are understandably ramping up slowly. I look for Casgevy to begin to generate meaningful revenue for Vertex in 2025.
Third, Vertex plans to report data from two key clinical trials next year. The company expects to share results from a phase 1/2 study evaluating messenger RNA therapy VX-522 in treating CF in the first half of 2025. It also expects to share initial data from part B of a phase 1/2 study evaluating VX-264 in treating type 1 diabetes. This data could be important in Vertex's goal to cure the disease.
Fourth, Vertex's pipeline includes two other late-stage programs that could be big winners. Inaxaplin targets APOL1-mediated kidney disease, while Povetacicept targets IgA nephropathy and other B cell-mediated diseases. These drugs could open up new markets for Vertex that are even larger than CF.
In the meantime, Vertex's powerful CF therapy Trikafta/Kaftrio continues to generate solid sales growth. The company is also sitting on a cash stockpile of $11.2 billion that it could use to fund acquisitions. Therefore, I think this biotech stock is one to buy sooner rather than later.
Should you invest $1,000 in Eli Lilly right now?
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David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in Vertex Pharmaceuticals. Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
