What are the best stocks? Usually, the ones that have clear paths to success.
Three Motley Fool contributors have identified what they believe are unstoppable stocks to buy in August. And they all happen to be biotech and pharma companies. Here’s why they picked Novo Nordisk (NYSE: NVO), Vertex Pharmaceuticals (NASDAQ: VRTX), and Viking Therapeutics (NASDAQ: VKTX).
There’s still plenty more room to grow
David Jagielski (Novo Nordisk): Shares of Novo Nordisk have soared more than 450% in the past five years. Despite those impressive gains, the healthcare stock still has much more room to run.
The company is investing in growing its manufacturing capabilities to help meet surging demand for its diabetes drug Ozempic and its popular weight loss treatment Wegovy. As these drugs accumulate more indications, the revenue potential of these already successful products will rise as well.
A recent study suggests, for example, that Ozempic could lower the risk of dementia. It has also been linked to a reduced risk of kidney disease progression. Meanwhile, the U.S. Food and Drug Administration (FDA) has already granted approval for another indication for Wegovy, to reduce cardiovascular risk in high-risk individuals.
There’s still so much potential for just these two drugs alone. That’s why it’s probable that analysts will upgrade their expectations for them, which, in turn, will lead to price upgrades for the stock, and more bullishness behind Novo Nordisk’s business.
Last year, Novo Nordisk generated revenue totaling 232.3 billion Danish kroner ($32.5 billion), with 41% of that coming from Ozempic and 13% from Wegovy. But sales could rise much higher as the company expands its production capabilities and rolls out these promising drugs to more markets.
Novo Nordisk looks unstoppable. Even with some incredible gains already, it’s not too late to invest in this top healthcare stock.
This biotech has multiple growth catalysts
Prosper Junior Bakiny (Vertex Pharmaceuticals): If there is one company in the biotech industry whose business is running like a well-oiled machine, it’s Vertex Pharmaceuticals. The drugmaker has been absolutely unstoppable in recent years as it continues to grow its revenue and earnings thanks to its dominance in the market for medicines that treat the underlying causes of cystic fibrosis (CF). But Vertex Pharmaceuticals is moving well beyond its core franchise.
The company has one brand-new product on the market, and two are currently being reviewed by regulatory authorities in the U.S. for approval. Vertex’s brand-new medicine, Casgevy, is a gene-editing treatment developed with CRISPR Therapeutics (NASDAQ: CRSP) that targets a couple of rare blood diseases. Casgevy has what it takes to become a blockbuster product.
Vertex’s medicines that could soon earn approval include Vanza Triple in CF and Suzetrigine in acute pain. Both could earn the green light by early next year.
Vertex will be less reliant on its CF portfolio, thereby mitigating the risk that a breakthrough in this area by another company would sink its stock price (not that it has had to worry too much about that). Furthermore, the biotech has a rich pipeline beyond these products.
Vertex Pharmaceuticals’ lineup will look very different from what it currently does five years from now. And in the meantime, the company will keep delivering solid financial results and above-average stock market performances. That’s what makes it a no-brainer buy.
No ordinary clinical-stage biotech
Keith Speights (Viking Therapeutics): Most clinical-stage biotech stocks don’t qualify as unstoppable. But Viking Therapeutics isn’t an ordinary clinical-stage biotech.
Viking appears to have a great chance of success with its obesity drug, VK2735. The company is advancing the dual GLP-1/GIP agonist into late-stage testing after receiving positive written feedback from the FDA.
Patients who received a weekly injection of VK2735 in a phase 2 clinical study achieved up to 15% weight loss after 13 weeks of treatment. This result was better than what Eli Lilly‘s tirzepatide (marketed as Mounjaro and Zepbound) and Novo Nordisk’s semaglutide (marketed as Ozempic and Wegovy) achieved in clinical trials.
Viking rattled its big potential rivals by announcing recently that it’s exploring a monthly dose of VK2735. The company is also evaluating an oral version of the experimental drug in an ongoing phase 1 study, with plans to begin a phase 2 trial later in 2024.
The company has another promising drug in phase 2 testing. VK2809 targets nonalcoholic steatohepatitis (NASH), which is also known as metabolic-associated steatohepatitis (MASH). Viking hopes to meet with the FDA in the fourth quarter to discuss the next steps to advance the drug into late-stage testing.
Viking Therapeutics’ market cap is only around $6 billion. If either of its two lead programs wins regulatory approvals and is commercialized, the company will be worth much more. And if both of the drugs make it to market, unstoppable might not be a strong enough adjective for Viking.
Should you invest $1,000 in Novo Nordisk 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 CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
3 Unstoppable Stocks to Buy in August was originally published by The Motley Fool
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