1 Stock That Increased 10,000% in 33 Years to Buy and Hold Forever


It’s not too late to get in on the act.

Investing in equity markets is a reliable, wealth-growing strategy. In the past 33 years, the S&P 500‘s average annual return is about 10.6%. It’s hard to find a return much better than that elsewhere.

Some individual stocks have performed even better, though. Take Vertex Pharmaceuticals (VRTX -0.74%), a leading biotech company whose average annual return since its 1991 initial public offering (IPO) is 15.1%. The drugmaker has grown by 10,310%.

It is an impressive performance, but Vertex still has plenty of growth ahead of it, and the stock looks like a solid buy-and-hold-forever pick. Here is why.

^SPX Chart

^SPX data by YCharts.

The secret to Vertex’s success

About 7,000 rare diseases affect between 25 million and 30 million Americans. Many don’t have approved therapies targeting their underlying causes. So, it’s not hard for a biotech company to pick a target in this universe of unmet medical needs that could prove highly lucrative. The hard part is developing effective medicines. That’s Vertex’s main (though not the only) focus. The company seeks to target the underlying causes of diseases for which there are few, if any, therapies.

Its work in cystic fibrosis (CF) in the past couple of decades is an amazing success story. CF is a disease that affects about 92,000 patients in North America, Europe, and Australia. It causes damage to internal organs. And until Vertex’s breakthroughs — its first CF product was formally approved in the U.S. in 2012 — there weren’t any medicines that addressed the illness at the genetic level. Vertex has been handsomely rewarded for its progress in this field. Revenue and earnings have grown rapidly.

VRTX Revenue (Quarterly) Chart

VRTX Revenue (Quarterly) data by YCharts.

But that’s in the past. Can Vertex Pharmaceuticals still perform well moving forward?

Don’t change a winning formula

Success in business doesn’t happen by accident. Yes, there is often an element of luck. However, corporations that perform consistently well for a long time must have a vision and the ability to execute a winning strategy. Vertex’s vision remains the same. It is still developing medicines for rare (and also not so rare) diseases. In the past, the biotech has proven that it can execute. Plenty of its peers tried to develop competing CF therapies. All of them failed, so far.

Vertex is now proving itself outside of its core area. It recently earned approval for Casgevy, a gene-editing treatment for a couple of rare blood-related diseases. It is advancing key programs through its pipeline. Inaxaplin, a potential therapy for APOL1-mediated kidney disease, is now in the phase 3 portion of a phase 2/3 study.

Suzetrigine, an investigational medicine for acute and neuropathic pain, performed well in a late-stage clinical trial, the results of which were announced earlier this year. There are plenty of pain medications, but they often carry burdensome side effects, so there is still a need here.

Vertex’s early-stage programs also look promising. The company is aiming to “cure” type 1 diabetes with VX-880. In an ongoing phase 1/2 study, three patients with at least a year of follow-up have achieved insulin independence. All people with type 1 diabetes (unlike the type 2 variety) typically need insulin. These results are impressive although it’s too early to celebrate. There is more going on with Vertex Pharmaceuticals.

However, the important point is this: Don’t invest in biotech because of specific clinical programs. VX-880 might prove ineffective and so might inaxaplin. Despite positive phase 3 results, suzetrigine could encounter unforeseen regulatory roadblocks. After all, Vertex has faced such clinical or regulatory headwinds before.

For instance, in October 2020, the biotech halted a phase 2 study for an otherwise promising candidate partly because of safety concerns. The company’s shares dropped off a cliff in one day as a result. Here’s how the stock has performed since then.

VRTX Total Return Level Chart

VRTX Total Return Level data by YCharts.

The lesson? Vertex’s prospects don’t hinge on any single program. The company’s strength is its clear vision and strategy and its culture of innovation, which allows it to achieve that vision. This is what makes Vertex Pharmaceuticals stock worth holding onto forever.



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