Usually, a bit of hesitation is good when you're investing. Taking a moment to research a company and understand its valuation, its weak points, and its potential growth is key if you want to succeed.
Every company has issues. But for a very small number of A-list businesses, it's possible to spend hours and hours doing your diligence without finding dealbreakers or major problems that'd give you pause before buying. Let's take a look at two monster stocks that could be great additions to most portfolios and lucrative, long-term holds.
NASDAQ: VRTX
Key Data Points
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 0.09%) is a monster stock because it's the undisputed master of the market for cystic fibrosis (CF) therapies. CF is a rare disease that requires lifelong treatment to deal with its pulmonary symptoms. There are only about 25,000 CF patients in the Western world that are eligible but not currently enrolled in treatment with any of the company's six therapies for the condition.
Vertex is advancing with commercial efforts to access that untapped market, not to mention chasing an even smaller population of around 5,000 patients for whom wholly new medicines are being developed. It's entirely possible that it'll eventually be treating nearly every diagnosed CF patient in the world, as it already treats more than half of them.
Over the last 10 years, developing and commercializing more and more therapies for CF led to Vertex fattening its annual revenue by 396% to arrive at a total of more than $7.5 billion in 2021. It's strongly profitable, still growing at a moderate pace, and only has $847.3 million in debt, so there aren't any obvious financial barriers in its future. That's key as Vertex is planning to use excess capital generated from its CF therapies to diversify into new disease areas, which will support its long-term growth.
In particular, it's moving forward with potentially curative treatments for sickle cell disease and beta thalassemia, a pair of hereditary blood disorders. If its ongoing phase 2/3 trials for the conditions pan out, it could see a pair of new drugs approved as soon as early 2023. But even if it fails somehow, that won't detract from its successes in CF.
Nor will its base of patients with CF stop needing their medicines. Vertex has so much top-line stability from its CF therapies that it has quite a few chances to try to enter new disease markets before money starts to become a problem. And with plenty of upside exposure via new drug development and limited downside exposure, it's an obvious candidate for being a monster stock moving forward too.
2. Apple
Apple (AAPL 2.58%) is another monster stock that's built on its perennial mastery of its markets, and it doesn't need much of an introduction. With $365.8 billion in annual revenue as of 2021, and 159.5% in annual free cash flow growth over the last 10 years, it's a juggernaut both due to its sheer scale and also due to its value-generating momentum. And because its brand is so well-known and associated with quality, it's able to draw customers to practically any new product.
NASDAQ: AAPL
Key Data Points
In terms of its top line, iPhones accounted for more than $40 billion in sales out of a total of nearly $83 billion as of its latest quarter. Importantly, Apple is an expert at planned obsolescence, which helps it to retain its market share over time. Many of the iPhones it sells this quarter will be replaced by another one sold by the company in a few short years. So far, perpetuating that trend hasn't required doing too much beyond making incremental improvements to the hardware with each subsequent release while keeping prices relatively stable.
Likewise, its ever-expanding offerings in software and cloud services help generate monthly cash flow in the long term. Though it has competition in most of its segments, Apple's profit margin actually increased over the last five years, even while growing its revenue to all-time highs in the third quarter of its fiscal year.
Investors should expect more profitable growth to come, helped by steady improvements in its existing products and potential launches of new ones. And so with very few reasons not to buy this monster stock (unless you already own a lot of it), it's one that I'd buy without hesitation.
