3 No-Brainer Stocks to Buy in September
Don't want to think too hard about your investing decisions? Then go with the stocks of highly profitable companies with strong growth prospects.
Three Motley Fool contributors identified several stocks that fit this description. Here's why they think Eli Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO), and Vertex Pharmaceuticals (NASDAQ: VRTX) are no-brainer healthcare stocks to buy in September.
The growth machine that never runs out of opportunities
David Jagielski (Eli Lilly): Eli Lilly continually gives investors reason to become even more bullish on its already plentiful growth opportunities. Right now, it's all about the growing upside and potential for tirzepatide -- the active ingredient in its type 2 diabetes and weight loss drugs, Mounjaro and Zepbound.
On Aug. 20, Eli Lilly released the results of a phase 3 study involving tirzepatide which further highlights just what kind of a game changer the drug could be for the healthcare industry. In the 176-week study, participants who were prediabetic and who were overweight or obese were able to reduce their risk of developing type 2 diabetes by 94% as a result of weekly tirzepatide injections.
That's a huge risk reduction that could lead to even greater demand for Mounjaro, which is now Eli Lilly's top-selling blockbuster drug. Last quarter (which ended June 30), its revenue topped $3.1 billion and more than tripled from the $980 million it generated in the prior-year period.
Eli Lilly is still in the early innings of not just rolling out Zepbound and Mounjaro to patients but also in studying the drug's possible wide-ranging benefits. And as those indications start to pile up, doctors could see plenty more reasons to prescribe the drug. While weight loss may be the most popular reason for patients to want to try it, reducing the risk of diabetes, heart failure, sleep apnea, and many other obesity-related issues could be what leads to greater insurance coverage for tirzepatide, and unlocks many more growth opportunities for Eli Lilly.
The stock possesses loads of potential and is an absolute no-brainer buy as its sales and profits are likely to continue to soar for years to come.
It's not too late to jump on the bandwagon
Prosper Junior Bakiny (Novo Nordisk): One of the challenges of investing in stocks is knowing when to buy a company's shares. Investors are supposed to "buy low," but does it ever make sense to buy a stock after it's soared? It does. When a stock has solid prospects and looks likely to continue beating the market, any point can be considered "low." Novo Nordisk is still on what looks like an unstoppable growth path.
Sales for the company's two main growth drivers, Ozempic (type 2 diabetes) and Wegovy (weight), have risen rapidly. Novo Nordisk aims to earn various label expansions for both drugs that will increase their sales. These successes aren't a fluke. Novo Nordisk has been a leader in the diabetes drug market for about 100 years. It is a pioneer in the GLP-1 receptor agonist space that is now driving the fast-growing weight loss market. While plenty of companies want to challenge Novo Nordisk, most are falling short.
The company boasts one of the most promising GLP-1 medicines in development: Cagrisema, which could generate $20.2 billion in revenue by 2030, according to some estimates. Cagrisema, which is currently in late-stage testing, is by no means the only promising product in Novo Nordisk's pipeline. It features several other candidates targeting weight loss and other areas. Novo Nordisk's plan to diversify its lineup is slowly taking shape as the company is developing drugs across various other diseases. The drugmaker's portfolio should look different and much more diverse in five years.
One thing that won't change is the company's ability to generate strong revenue, earnings, and superior stock market performances. Novo Nordisk remains a no-brainer for healthcare investors.
Six reasons to buy this biotech stock
Keith Speights (Vertex Pharmaceuticals): Currently, Vertex Pharmaceuticals has one blockbuster drug in its lineup -- Trikafta/Kaftrio. The cystic fibrosis (CF) therapy is a massive winner that's on pace to rake in over $10 billion in sales this year. However, Trikafta/Kaftrio isn't the main reason to buy this biotech stock. There are six other reasons.
First on the list is Casgevy. It's the first CRISPR gene-editing therapy on the market. Casgevy doesn't just treat sickle cell disease and transfusion-dependent beta-thalassemia, it cures the two rare blood disorders. Unsurprisingly, Vertex thinks the product has a multibillion-dollar opportunity.
The company awaits regulatory approvals for the second and third reasons to buy the stock. The U.S. Food and Drug Administration (FDA) set a PDUFA date of Jan. 2, 2025, to make an approval decision on Vertex's newest CF therapy, a triple-drug combination featuring vanzacaftor. And the FDA expects to announce its approval decision for suzetrigine in treating acute pain on Jan. 30, 2025. Both drugs will likely be blockbusters if approved (which seems likely).
Reasons four and five require a little more waiting. Vertex is evaluating two other drugs in pivotal clinical studies. Inaxaplin targets APOL1-mediated kidney disease, which affects around 100,000 people (roughly 8,000 more than CF). Meanwhile, povetacicept is a "pipeline-in-a-product" targeting autoimmune kidney diseases.
What's the sixth reason to buy Vertex? Its earlier-stage pipeline. The biggest game changers to watch out for are VX-880 and VX-264. Both are islet cell therapies that hold the potential to cure type 1 diabetes.
Vertex doesn't need all of these programs to succeed to grow much larger over the next decade. However, I suspect that most of them will and I think the stock is absolutely a buy.
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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.
3 No-Brainer Stocks to Buy in September was originally published by The Motley Fool