Office products retailer Staples ran a TV commercial several years ago that featured an "easy button." Many investors probably wish they had an easy button to help pick winning stocks. Unfortunately, such a device doesn't exist. However, there are some stocks that are easier choices than most.
We asked three Motley Fool contributors to identify no-brainer stocks to buy with $1,000 right now. Here's why they chose Eli Lilly (LLY -1.00%), Novartis (NVS 0.72%), and Vertex Pharmaceuticals (VRTX -0.76%).
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The future looks bright for this pharma giant
Prosper Junior Bakiny (Eli Lilly): Pharma giant Eli Lilly has performed well in the past 12 months, with its shares nearly tripling the return of the S&P 500. The company has been above-average in this department compared to most of its peers in the industry, not just last year, but over the past half-decade. Lilly's recent stock market performances aren't surprising, though, given the solid financial results the company has delivered.
But just as important is the company's pipeline, which boasts several exciting candidates. One of the most promising of the bunch is tirzepatide, a potential treatment for type 2 diabetes. Lilly submitted applications for this therapy in the U.S. and Europe late last year. Regulatory decisions will almost certainly come down this year. The pharma giant is also developing a potential treatment for Alzheimer's disease called donanemab.
The research company EvaluatePharma estimates that these two are among the 10 most valuable research and development projects by net present value (NPV) in the industry, with a combined NPV of about $34.5 billion. But Lilly has many other pipeline programs as well, including additional diabetes-related candidates such as basal insulin-Fc. This potential once-weekly insulin product shows real promise as well. Overall, Eli Lilly's pipeline boasts a few dozen ongoing clinical trials.
Of course, the company can also rely on its existing lineup. Many of its current products continue to perform very well. These include Emgality, a treatment for migraines, cancer drug Verzenio, immunosuppressants Taltz and Olumiant, and diabetes medicines Jardiance and Trulicity.
These products will continue to drive top line growth for Eli Lilly, and the addition of newer medicines will make its business even more attractive than it already is. That's why long-term investors can't go wrong with this pharma stock in March.
A safe stock with plenty of room for growth
David Jagielski (Novartis): Given the turmoil in the markets this year, one of the best places to invest right now is in a stable, growing business that also pays a dividend. That's what makes Novartis such a no-brainer buy. Investing $1,000 into this healthcare company can be a great way to generate some modest gains. And if you can afford to invest more into the stock, then all the better.
In 2021, the company's sales totaled $52.9 billion, up 6% year over year. It reported an operating profit of $11.7 billion that was also an impressive 22% of its top line. And Novartis' free cash during the year was $12.1 billion, up from $11.1 billion in 2020.
Those strong financials could free up the company to make additional acquisitions, which have played a large part in its growth over the years. Since 2018, Novartis has spent close to $30 billion in acquisitions. And on the company's most recent earnings call, management suggested that with all of its free cash flow, Novartis could continue to make more purchases in the future.
But even without acquisitions, the business still has many opportunities for more growth. Novartis has more than 20 assets that could obtain approval by 2026 that it says can generate "significant sales." That gives the company confidence in being able to project a steady 4% compounded annual growth rate in its top line until then.
Not only are there lots of growth opportunities with Novartis ahead, but the stock also pays a dividend that yields just over 4% -- more than three times the S&P 500 average of 1.3%. And with a forward price-to-earnings multiple of 13, it's also cheap. Investors are paying more than 15 times future earnings for the average stock in the Health Care Select Sector SPDR Fund.
Whether your focus is on long-term growth or just an attractive dividend payout, Novartis looks like a no-brainer investment right now.
Potential game-changers on the way
Keith Speights (Vertex Pharmaceuticals): Vertex Pharmaceuticals has become almost synonymous with cystic fibrosis (CF) treatment. That's understandable, considering that the big biotech markets the only drugs that address the underlying cause of the genetic disease.
CF should remain an important growth driver for Vertex for years to come. The company still has a large untapped market that it hopes to penetrate through securing additional reimbursement deals and gaining approvals for its existing drugs in younger age groups.
But Vertex also has some potential game-changers on the way outside of CF. The company's best near-term prospects lie with CTX001. Vertex and CRISPR Therapeutics developed the gene-editing therapy that targets two rare blood diseases -- beta-thalassemia and sickle cell disease. The two partners anticipate filing for regulatory approvals of CTX001 in both indications later this year.
Vertex's pipeline also includes VX-147, a promising therapy targeting APOL1-mediated kidney diseases. The experimental drug performed really well in phase 2 clinical studies and is advancing into late-stage testing. More patients have APOL1-mediated kidney diseases than have CF, which means Vertex could have yet another huge market opportunity if VX-147 is successful.
Perhaps the biggest potential game-changer of all, though, is Vertex's type 1 diabetes (T1D) program. The company announced encouraging early results in January from a phase 1 study of VX-880. It also plans to file for approval this year to move another T1D stem cell therapy into clinical testing. Vertex's ultimate goal isn't just to treat T1D; the company hopes to cure the disease.
Despite its massive opportunities, Vertex is still cheap. Its shares trade at only 16 times expected earnings. My view is that Vertex is a top biotech stock for investors to buy and hold for the long term.
