There are hundreds of publicly traded companies on various equity markets worldwide. Investors choose to put their hard-earned money into specific companies based on their preferences, risk tolerance, goals, investment horizons, available capital, etc. Because these factors vary quite a bit from one person to the next, choosing a single stock everyone "should" invest in is hard.
However, my preference lies in the healthcare sector, and my favorite growth stock is Vertex Pharmaceuticals (VRTX 0.53%). Read on to discover why many could benefit from investing in this terrific company.
Economic fluctuations affect consumers, businesses, and, by extension, the performance of equities. During recessions, people are less likely to buy various goods and services, leading to lower revenue and profits for their sellers. Corporations that develop and market lifesaving drugs are somewhat insulated from this problem. Physicians won't stop prescribing medicines for cystic fibrosis (CF), a rare and life-threatening disease when left untreated, when the economy is in the dumps.
Vertex's success since the early 2010s is due to its work in CF. The company famously markets the only approved medicines that target the underlying causes of this condition. Thanks to its monopoly, Vertex has substantial pricing power. That is a terrific competitive advantage.
True, Vertex has made substantial progress in the relatively small pool of CF patients, about 109,000 worldwide, including 94,000 in its key regions of North America, Europe, and Australia. However, there is some room left for growth. About 75% of patients in these key geographies have started treatment with one of Vertex's most effective medicines, Trikafta. That number stands at 33% in other countries.
Vertex recently earned approval for yet another CF treatment, Alyftrek, that is just as effective while requiring one dose per day (versus two for Trikafta). It is still developing other therapies for the small percentage of patients who aren't eligible for its current medicines. So, Vertex's breakthroughs in CF will continue helping it drive solid top-line growth even amid challenging economic conditions.
Vertex's Trikafta and Alyftrek won't run out of patent exclusivity until the late 2030s. Even so, other biotech companies could develop competing medicines. None have been able to so far, but Vertex will continue to face that risk unless it can diversify its lineup. Fortunately, it has done that in recent years. In 2023, it earned approval for Casgevy, a gene-editing treatment for a duo of rare diseases it developed with CRISPR Therapeutics.
In January, the U.S. Food and Drug Administration gave the green light to Journavx, a medicine for acute pain. The point here is that Vertex can develop therapies outside of its core therapeutic area of CF, and there is more where that came from, too. The company has several pipeline candidates in various stages. It will seek label expansions for Journavx, and it is running a phase 3 study for inaxaplin, a potential treatment for APOL-1 mediated kidney disease, and more.
These programs won't all pan out. Vertex has faced clinical setbacks before. But instead of focusing on a single area, the company is casting a wider net that should lead to at least some successes, as we have already seen with Journavx and Casgevy. Expect more brand-new medicines in the next few years.
Vertex won't appeal to every investor. Obviously, income seekers won't find what they want here since Vertex doesn't pay dividends. Others might opt to invest in companies in transformative industries like artificial intelligence. That's fine, but Vertex Pharmaceuticals has much to offer those with a decade-plus investment horizon.
It has medicines that should drive top-line growth for a while, a business whose products are in high demand regardless of economic conditions, and a highly innovative culture that should produce more breakthrough medicines in the future. That's why if I could buy only one stock right now, it would be Vertex Pharmaceuticals.
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