Any time is a great time to buy stocks — if you pick the right stocks. That’s true even in May, a month where some investors have traditionally opted to take a break from the stock market for the summer.
Three Motley Fool contributors think they’ve found no-brainer healthcare stocks to buy in May. Here’s why they picked Eli Lilly (LLY 3.78%), Novo Nordisk (NVO 5.53%), and Vertex Pharmaceuticals (VRTX 0.40%).
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An unstoppable growth stock with plenty of runway
David Jagielski (Eli Lilly): One of the best growth stocks you can buy in the healthcare sector today is Eli Lilly. The company has experienced a surge in revenue in recent years, thanks in large part to its GLP-1 offerings, Zepbound and Wegovy, which are still in the early stages of their growth.
Just a few years ago, the company was coming off a lackluster performance in 2022, when sales totaled less than $29 billion and showed minimal growth from the previous year. Last year, however, its top line jumped to more than $45 billion, growing by 58% in a span of just two years.
It’s no mystery why, either. Zepbound, which was approved as a weight loss treatment in late 2023, began contributing in a big way to the company’s top line, generating $4.9 billion in revenue last year. Meanwhile, Mounjaro, which is approved for the treatment of diabetes, more than doubled its sales to $11.5 billion, becoming Eli Lilly’s top-selling drug in the process. Trulicity, once the center of Eli Lilly’s portfolio, fell by 26% with sales totaling $5.3 billion last year.
But with Eli Lilly focusing on a highly lucrative GLP-1 drug market, those gains can more than outweigh any declines that its other products experience. Currently, the company is working on what may be an even bigger opportunity: a weight loss pill. Late-stage trial results involving orforglipron have been encouraging, and it may obtain approval by next year.
Although Eli Lilly is worth $800 billion and may seem expensive, trading at over 75 times its trailing earnings, this growth stock looks unstoppable and could easily hit a $1 trillion valuation within the next year or two, given its impressive results.
Buy the dip on this excellent stock
Prosper Junior Bakiny (Novo Nordisk): It wasn’t that long ago that Novo Nordisk seemed almost unstoppable. The Denmark-based pharmaceutical leader’s revenue and earnings were flying high while it delivered market-crushing returns. That has changed over the past 18 months, or at least the part about superior stock market returns. Novo Nordisk encountered clinical setbacks with what were previously thought to be promising pipeline candidates.
However, there remain excellent reasons to invest in Novo Nordisk. The company is still a leader — perhaps the leader — in diabetes and obesity care. Despite recent clinical setbacks, the company’s pipeline in this field is incredibly deep. There is an excellent chance Novo Nordisk will redeem itself in the next few years. Furthermore, Novo Nordisk’s financial results remain strong. Perhaps some of that success was already baked into the stock price before the recent sell-off. But after dropping by almost 50% over the trailing-12-month period, Novo Nordisk’s shares now look far more attractively priced.
Lastly, Novo Nordisk is developing products outside its core area of endocrine-related disorders. That’s a great move, considering the increased competition in the weight management market, which, by the way, should still grow by leaps and bounds in the coming years. Novo Nordisk’s pipeline features investigational drugs across various areas, including rare blood diseases, metabolic dysfunction-associated steatohepatitis, and others.
Novo Nordisk may have lagged behind the market over the past year, but it still has attractive long-term prospects. The stock looks like a no-brainer at current levels, at least for investors willing to hold on to its shares for a while.
This big biotech stock should continue beating the market
Keith Speights (Vertex Pharmaceuticals): You wouldn’t know that the stock market has been in turmoil by looking at Vertex Pharmaceuticals’ performance. The big biotech stock has soared roughly 24% year to date. I think Vertex will continue beating the market.
The main reason for my optimism over the near term is the tremendous commercial potential for Vertex’s new pain medication, Journavx. This non-opioid drug won U.S. Food and Drug Administration (FDA) approval on Jan. 30 for treating moderate to severe acute pain. Vertex already has strong early momentum with payers. I don’t expect it will take long for Journavx to become a blockbuster drug for the company.
Journavx isn’t the only reason I’m bullish about Vertex, though. The biotech innovator has another new product on the market: cystic fibrosis (CF) therapy Alyftrek. Vertex has the only approved therapies for treating the underlying cause of CF. Alyfrek offers a more convenient dosing than the company’s current top-selling drug, Kaftrio/Trikafta. It should also be more profitable for Vertex because of its lower royalty burden.
Gene-editing therapy Casgevy hasn’t moved the needle much for the company yet after securing FDA approvals for treating sickle cell disease and transfusion-dependent beta-thalassemia in late 2023 and early 2024, respectively. However, the CRISPR gene-editing process Casgevy uses is complex. Vertex believes the commercial momentum is building and that Casgevy has a multibillion-dollar opportunity.
Don’t overlook Vertex’s pipeline, either. The company has four programs in phase 3 testing, all of which have the potential to be big winners. I’m especially watching the progress of zimislecel, an islet cell therapy that could cure severe type 1 diabetes. Success for zimislecel should bode well for VX-264, which doesn’t require immunosuppressants and could be used in a larger patient population.