Just when it looks like the market's finally found a bottom ... wham! Stocks head a little bit -- or a lot -- lower. The Nasdaq Composite (^IXIC 2.25%) feigned a recovery effort in the latter half of June, but in the wake of its 5% slide from its early-July high point, the index now sits 30% below the all-time peak it touched in November. And it seems like it could move even lower from here.
Not every Nasdaq-listed stock is suffering, though. In fact, some have shrugged off the bearish tide and are making upward progress. Here's a closer look at two that investors should have their eyes on.
1. Li Auto
While Tesla may be the centerpiece of most discussions about the electric vehicle (EV) market, it's not the only major player in the game. It's just the biggest name in the U.S. In China, Li Auto (LI 7.07%) is making a splash with its all-electric, six-seat, luxury SUVs. The company delivered 31,716 of them during the first quarter, and while that figure fell to 28,687 in the second quarter, that was largely due to the strong measures China is still taking to contain and prevent COVID-19 outbreaks within its borders. Absent the lockdowns that the Chinese government imposed, the company could have and would have made more EVs in Q2.
Even so, bigger delivery numbers for the quarter still would have only scratched the surface of its opportunity. Li Auto reports that it has an order backlog of more than 30,000 vehicles after sales of EVs more than doubled in China last year, reaching a total of 2.9 million units, according to data from the China Association of Automobile Manufacturers. The China Passenger Car Association estimates that EV unit sales could double again this year to between 5.5 million and 5.9 million, depending on whether or not you count battery-powered buses.
According to market research outfit Canalys, half of last year's worldwide EV sales were made in China. That's still only a fraction of the potential market, however. China's total vehicle sales hit 26.3 million in 2021.
The fact that China's electric vehicle market is growing so rapidly even as its fragmented industry isn't entirely ready for that growth is ideal for Li Auto. It has both the capacity to increase its production and a brand name that will allow it to compete with other major players.
That's what investors seem to be thinking anyway. They've bid up the stock even as most others are losing ground. Li Auto shares are up 24% year to date, and up by 32% over the past 12 months.
2. Vertex Pharmaceuticals
Even more impressive are the gains being dished out by Vertex Pharmaceuticals (VRTX 0.28%). Shares of the biopharma company are up nearly 30% since the end of last year, reversing a trend of weakness that punished it for the better part of the pandemic.
That's not entirely surprising. The advent of COVID-19 largely split the pharmaceutical industry into two groups. Shares of any drugmaker that made products that directly helped battle the pandemic generally did well when the contagion was raging. Shares of pharmaceutical outfits that were not directly involved in that effort typically struggled. Vertex was part of the latter group.
Now that the most intense phases of the battle against COVID-19 are (mostly) in the rear-view mirror, the pandemic's impact on healthcare industry stocks is largely unwinding. And for Vertex, it's unwinding in spades. That's because during the past two years, it continued to make strides in developing diabetes and cystic fibrosis drugs, and its efforts are now bearing fruit.
In late 2020 and 2021, its cystic fibrosis drugs Kaftrio, Symdeko, and Trikafta were all approved for wider usage. Of particular importance, they can now be prescribed to many children afflicted with the disease, who previously had few other good treatment options.
Also in 2021, VX-880 -- its diabetes treatment candidate -- was given a Fast-Track designation by the Food and Drug Administration, meaning the regulator will expedite its review process. And earlier this month, Vertex Pharmaceuticals announced it will be acquiring ViaCyte, which owns intellectual property that could make VX-880 even more effective. Vertex management's goal in making the deal was to speed up the development of VX-880, hopefully allowing it to bring a functional cure for type 1 diabetes to market sooner.
It's a moving target to be sure. The company is selling its products at the same time as it's developing new ones and winning add-on approvals for therapies already on the market. It's difficult to get a bead on just how much revenue it might be generating just a couple of years from now.
What is clear, though, is that Vertex's sales and earnings are on the rise and should remain on the rise for the foreseeable future. Revenues in 2022 are apt to grow by a little over 13% and pump up profits from last year's $13.02 per share to $14.20 per share. Clearly, those prospects have already gotten the attention of many forward-thinking investors.
