You may be spending a little more time than you'd like these days thinking about a future market crash. But instead of letting the recent stock-market decline scare us, we should let it help us: Let's use it as a reminder that market corrections and crashes will happen.
There are two pieces of good news here. First, you can be prepared. And second, the market always recovers.
Here, I'll focus on the idea of being prepared. During a crash, it's unlikely your portfolio will deliver its best performance ever. And that's OK. But you can choose stocks that probably will weather the storm -- and most importantly, thrive once the market recovers.
I like the idea of healthcare companies, because need for their products remains steady (or even grows) regardless of the state of the economy or the stock market. Let's take a look at two crash-ready stocks you could buy now with $2,000.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.22%) is the leader in the treatment market for cystic fibrosis (CF). The company generates billions of dollars annually from the sales of four drugs. One stands out, though: That's its latest blockbuster, Trikafta. This treatment has the potential to help 90% of CF patients. What about competition? Well, the medicine most likely to unseat Trikafta is actually another Vertex candidate, now in phase 3 studies. Vertex has said its global leadership in the CF market is set to last until at least the late 2030s, so the revenue picture looks bright. And we haven't even moved past its CF business yet.
Beyond CF, Vertex is making significant progress. The company and partner CRISPR Therapeutics (CRSP 3.06%) are testing their gene-editing treatment for blood disorders in a pivotal trial. The companies aim to file for approval by the end of the year. It could be a game changer since it's a one-time curative treatment. It also may be a game changer because it will treat beta thalassemia and sickle cell disease -- illnesses with limited treatment options today.
Vertex also is progressing on candidates where there's great need: pain, and type 1 diabetes. Today, treatments for acute pain are largely limited to opioids or over-the-counter medicines like aspirin, so demand could be high for Vertex's non-opioid option if it's successful. The company recently reported positive phase 2 data for that candidate. Vertex also recently reported positive data from a phase 1/2 trial of its type 1 diabetes candidate. Regulators put a temporary hold on the trial -- but Vertex is working to answer questions and get things moving again as soon as possible.
Pfizer (PFE -0.63%) has become a household name thanks to its coronavirus vaccine, Comirnaty, and its coronavirus pill, Paxlovid. The pharmaceutical company expects the former to generate $32 billion in revenue this year and the latter to bring in $22 billion. These, plus Pfizer's many other commercialized products, should provide revenue in the range of $98 billion to $102 billion this year.
First, let's talk about the coronavirus program. Investors think the enormous gains we're seeing today won't last as the pandemic shifts to an endemic situation. Right now, it's too early to predict coronavirus vaccine and pill revenue in the coming years. But they may not drop dramatically, because the virus will continue to circulate. That means at least the most at-risk individuals are likely to go for annual boosters. And people who do contract the virus may decide on Pfizer's pill.
Meanwhile, the huge amount of revenue Pfizer is generating from its coronavirus program is allowing it to invest in its future. This is important because it may help Pfizer compensate for declining revenue down the road, when some of its current blockbusters lose patent protection.
One recent investment that could be promising is the purchase of Biohaven Pharmaceutical Holding (BHVN 4.72%). This gives Pfizer Biohaven's commercialized migraine treatment, Nurtec ODT -- and a migraine candidate in nasal spray form that's currently under regulatory review. The U.S. Food and Drug Administration approved Nurtec ODT in 2020, doctors now have prescribed it about 2 million times, and Nurtec ODT revenue rose 182% year over year in the first quarter.
Of course, we still can count on revenue from Pfizer's nine blockbusters across a variety of treatment areas. Innovation within the company should contribute to future revenue too. Today, Pfizer has 96 candidates in the pipeline, and 29 of those candidates are in phase 3 studies.
So, what about your $2,000?
You might choose to split your investment equally between Vertex and Pfizer. Or if you prefer the profile of one of these stocks over the other, you could invest a bigger percentage in that company. Both of these stocks look like solid long-term plays; it's best to buy shares and wait at least five years before deciding whether to continue holding or not.
It's impossible to predict whether Vertex and Pfizer will outperform indexes during the next market crash. But it's pretty likely they'll continue selling their products and bringing in solid revenue during those difficult moments -- and that should result in positive share performance over time.