What makes for an unstoppable stock that'll keep growing regardless of the economic conditions and global uncertainties? In a word, reliability. If a company's business model is durable and proven to be all-weather by years of strong performance, it won't be at risk for as many problems when things get dicey.
In this vein, there are three such companies that investors should know about and consider buying today. All three outperformed the market over the last 12 months and the last 10 years. Let's look at a quick rundown of each.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.06%) is one of the world's largest biopharma companies, and its long-standing focus on developing and commercializing medicines for cystic fibrosis (CF), a rare hereditary pulmonary disease, is what makes it so formidable. It's the only company making therapies for CF, and its market penetration is quite impressive. Of the estimated 83,000 patients with CF in the western world, Vertex's products treat all but 25,000 patients who are eligible.
And the trailing-12-month sales from those patients were over $7.9 billion, a figure that's slated to increase as the company's pipeline continues to churn out more drugs to capture the remaining slice of the CF market. Vertex is also diversifying into other disease markets like sickle cell disease.
In the last five years, Vertex's annual net income grew by 788.9%, barely blinking in response to the chaos of 2020. Because patients with CF can get their medications covered by insurance and their demand for treatment doesn't change regardless of what's happening in the economy, its business is relatively secure from external disruptions. That bodes well for the company's prospects during the current crop of inflation, to say the least, but it's also a strong foundation for success during calmer times too.
2. Thermo Fisher Scientific
Thermo Fisher Scientific (TMO 0.33%) makes all manner of products for the biomedical sector, including analyzer devices, clinical diagnostic tests, laboratory equipment, reagents, and other consumables. And 55% of its $41.1 billion trailing 12-month revenue is derived from recurring sources, like sales of laboratory consumables to pharma and biotech companies. Without the products Thermo manufactures, its customers aren't about to be developing any new medicines, as many of its offerings are the standard in biopharma.
So as long as those customers are still in operation, Thermo won't have any problem growing quarter after quarter, building both its base of revenue and also its already-powerful brand recognition. And since management estimates that its target market is growing by as much as 6% per year, it won't run out of opportunities to expand further.
To top it off, from 2011 through 2021, its free cash flow (FCF) expanded at an annual compound annual growth rate (CAGR) of 17%, which is remarkably high. Given its capstone status as the supplier of first resort for biomedical research, it's hard to imagine this company facing any setbacks it can't recover from promptly.
3. Costco Wholesale
The consumer giant Costco Wholesale (COST 1.01%) is perhaps the definition of an unstoppable stock. Though its profit margin is slim, near 2.6%, the company's wholesaling warehouses, which require a membership to shop at, are operated quite efficiently. Plus, with rising inflation sending many consumers looking for ways to trim costs by buying groceries and household goods in bulk, Costco is favorably positioned to increase its $195.9 billion in 2021 total revenue over the next few years.
In the last 10 years, Costco's annual revenue and net income have risen by 97.6% and 193%, respectively, indicating that its membership base and sales per member are both growing. Costco's secret weapon working for shareholders is its highly consistent compounding over time, made possible by its highly loyal base of customers. Indeed, 92.3% renew their membership each year, yielding $4.1 billion in membership fees over the last 12 months.
While there are plenty of other places its members could shop where they wouldn't need to pay an annual fee, the company's devotion to keeping prices low mitigates the risk of defection. In the long run, that's been a successful strategy, and there's no reason to believe management is thinking of changing its focus anytime soon.
