You can find growth stocks in every sector. With healthcare making up nearly one-fifth of the U.S. economy, it's a great place to look.
Three Motley Fool contributors have identified what they think are magnificent growth stocks to buy in March -- and all of them are in the healthcare sector. Here's why they picked Eli Lilly(NYSE: LLY), Moderna(NASDAQ: MRNA), and Vertex Pharmaceuticals(NASDAQ: VRTX).
Eli Lilly can be a top growth stock for years
David Jagielski(Eli Lilly): One stock that could potentially usurp one of the tech stocks in the "Magnificent Seven" is Eli Lilly. The company's prospects are truly magnificent, thanks to a couple of promising glucagon-like peptide-1 (GLP-1) drugs in Mounjaro (for diabetes) and Zepbound (weight loss).
The potential is massive, with analysts repeatedly upgrading their forecasts for weight loss drugs given their potential to treat other diseases and conditions. Analysts at Morgan Stanley already have an extremely optimistic outlook for the anti-obesity drug market, projecting that it could grow by a multiple of 16, reaching a value of more than $100 billion by 2030.
A recent trial found that tirzepatide, the active ingredient in both Mounjaro and Zepbound, can potentially be an effective treatment for metabolic dysfunction-associated steatohepatitis, or MASH, a form of liver disease. Another study, involving Wegovy, a rival weight loss drug from Novo Nordisk, showed that this GLP-1 drug could help reduce cardiovascular risk for obese individuals with heart disease.
While Eli Lilly's drugs haven't yet been approved for that indication (and neither has Wegovy), it's a positive sign of the sheer potential growth they could generate for the business.
Some analysts believe tirzepatide could produce $100 billion in revenue for Eli Lilly and be the best-selling drug ever. Although the stock might look expensive right now, trading at more than 130 times its trailing earnings, it still might not be too late to invest given that Zepbound and Mounjaro are still in the early stages of their growth.
Moving beyond COVID
Keith Speights (Moderna): Don't think of Moderna as just a COVID vaccine stock. Sure, that's been true in recent years, but it's likely to change soon.
The Food and Drug Administration (FDA) set a PDUFA date of May 12, 2024, for its decision on respiratory syncytial virus (RSV) vaccine mRNA-1345. Moderna could have a big winner on its hands if the vaccine is approved as anticipated.
While there are a couple of other new RSV vaccines on the market, only mRNA-1345 has a pre-filled syringe that offers convenient administration.
I think that this vaccine will provide a big boost to Moderna, and the company does, too. It projects that the business will return to sales growth in 2025 thanks in large part to its new RSV vaccine.
That's not the only good news that could be on the way. Moderna plans to file for approval of its mRNA-1010 seasonal flu vaccine this year. It expects results from two other key late-stage clinical programs in 2024 as well.
One is mRNA-1083, the company's combination COVID-flu vaccine candidate. The other is experimental cytomegalovirus vaccine mRNA-1647.
In the meantime, Moderna's Spikevax coronavirus vaccine should continue to rake in a lot of money. Granted, sales have declined sharply due to sinking demand, but management still projects that Spikevax will generate sales of around $4 billion this year.
I'm also quite optimistic about the company's individualized neoantigen therapy mRNA-4157. Moderna and Merck are evaluating the experimental vaccine in combination with blockbuster immunotherapy Keytruda in treating several types of cancer. Phase 2b study results showed that this combo reduced the risk of recurrence or death in melanoma patients by 49%.
Moderna's stock has plunged since mid-2021. My prediction, though, is that the company's oncoming wave of new products will spark a big comeback.
There is no stopping this biotech
Prosper Junior Bakiny (Vertex Pharmaceuticals): If you're looking for a fantastic growth stock to buy in March -- or in any other month -- you can't go wrong with Vertex Pharmaceuticals. Though there are plenty of growth companies on the market, few benefit from a monopoly like this biotech does. It is the only company in the world that markets therapies to treat the underlying causes of cystic fibrosis (CF).
This isn't a situation where Vertex holds 90% of the market, and several smaller competitors are fighting for the scraps. There is only one game in town here, and its name is Vertex Pharmaceuticals.
The company's innovative wheel is still spinning. It recently reported positive results for its next-gen CF medicine. The drugmaker is also expanding its lineup. It is currently launching a gene-editing therapy called Casgevy that targets a pair of blood-related disorders.
Management is looking to target the market for pain medicines. Yes, there are plenty of options here, but many come with significant side effects, especially opioid-based ones. Vertex's VX-548, which recently posted good phase 3 data, is on the trail here. The biotech has a pipeline full of other candidates, most of which are targeting areas with severe unmet needs.
That's how it achieved exceptional success in the CF market -- Don't put it past the company to do it again. So, even though Vertex Pharmaceuticals has crushed the market in the past decade, it is still time to get in on this magnificent growth stock.
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 Merck and Vertex Pharmaceuticals. The Motley Fool recommends Moderna and Novo Nordisk. The Motley Fool has a disclosure policy.
