The conventional wisdom is that there are two important aspects of timing in investing: when to buy a stock and when to sell it. But are there some stocks that allow you to eliminate the selling part?
Three Motley Fool contributors think the answer to this question is a resounding "yes." Here's why they view AbbVie(NYSE: ABBV), Eli Lilly(NYSE: LLY), and Vertex Pharmaceuticals(NASDAQ: VRTX) as healthcare stocks to buy and hold forever.
The key to longevity
Keith Speights (AbbVie): What's the secret to longevity in the business world? Having the ability to adapt to a fast-changing environment. If a company can adapt successfully, it will remain in business indefinitely. I think AbbVie is a master at adapting.
Consider that in 2013 (the year it was spun off from Abbott Laboratories), AbbVie's autoimmune disease drug, Humira, generated 57% of the company's total revenue. Its No. 2 product at the time, AndroGel, made less than one-tenth the sales achieved by Humira.
But Humira no longer has patent exclusivity. Is AbbVie struggling with sinking sales for its top-selling product? Nope. The company adapted. In the years leading up to Humira's patent expirations, it invested heavily in research and development. And it made smart acquisitions.
Those efforts have paid off. In the second quarter of 2024, Humira accounted for only 19.5% of AbbVie's total revenue. However, the drugmaker still raked in over 42% more revenue in the first half of this year than it did in all of 2013.
I have no doubt whatsoever that the company will be able to survive and thrive in the future no matter what changes arise. And it will pay shareholders handsomely along the way: AbbVie is a Dividend King with a forward dividend yield of 3.2%.
Eli Lilly is a top stock you can buy and forget about
David Jagielski(Eli Lilly): There aren't many stocks that I would feel comfortable saying you can buy and hold forever, but pharma giant Eli Lilly is certainly one of them. With a rich history of growth that goes back over a century, the company has continually found ways to grow and innovate.
Its top-selling products this year are likely going to be Zepbound (for weight loss) and Mounjaro (diabetes), and that might not change for the foreseeable future. Innovating, however, is going to be a key part of its long-term success, and Eli Lilly is well equipped for that.
With strong fundamentals and a broad business that encompasses many therapeutic areas, Lilly has many ways it can expand its operations in the long run. Cancer, immunology, neurodegeneration, and pain are some of the areas that it's focusing on in its pipeline.
Then there are acquisitions Lilly can pursue to bolster and accelerate its growth. It can afford to do that because it generates impressive profit margins of around 20%, which can help the business accumulate the cash it needs to pursue whichever growth opportunities it sees fit.
The blockbuster drugs it has today can help Lilly generate revenue and profits that will help pave the way for the new drugs it will bring to market. Patents don't last forever, which is why the company's constant focus on innovation is what makes this a great stock to buy and hold.
And that culture of growth is evident at the very top. CEO David Ricks, when talking about the company's early gains in the weight loss market, doesn't appear to be content with Eli Lilly's strong results and assets.
Instead, Ricks said in a recent interview that he is looking to "exploit" the company's lead in obesity treatment by bringing more products to market. That's the kind of leadership and mentality that can ensure that Eli Lilly remains a top growth stock for decades.
A company with a winning vision
Prosper Junior Bakiny (Vertex Pharmaceuticals): Most businesses have a goal or mission, something they are trying to accomplish beyond generating profits. Having one does not guarantee success, but it helps give the company a general direction.
Vertex Pharmaceuticals, a leading biotech, set out to develop medicines for serious diseases, particularly those for which there are few treatment options. The drugmaker isn't the only one in the industry with this focus but has been one of the best at it.
Vertex developed and currently markets the only drugs that treat the underlying causes of a rare disease called cystic fibrosis (CF). It has maintained this monopoly for over a decade despite several large and successful drugmakers actively trying to mount a challenge.
Having a strategy means nothing without the ability to execute. Vertex has both, as demonstrated by its CF-related breakthroughs. The biotech is moving beyond its core area of expertise.
Its most recent launch, Casgevy, is a gene-editing treatment for two rare blood diseases. It should have several more treatments in the coming years, including a therapy for acute pain currently being evaluated for approval by regulators.
Its pipeline features several other promising candidates. The past might not guarantee future success, but in Vertex's case, its past performance is due to underlying strengths that its business still seems to display.
There will be headwinds and setbacks; that's inevitable. However, Vertex Pharmaceuticals looks poised to deliver important medical breakthroughs, strong financial performance, and excellent stock market returns over the long run. It is a fantastic stock to buy and hold forever.
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David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in AbbVie and Vertex Pharmaceuticals. Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Abbott Laboratories and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
