Most investors would like to see their stock portfolio grow significantly, especially if they have quite a few years left until retirement. Moreover, savvy investors would search for such growth without the associated risks involved with investing in speculative stocks.
Alphabet (GOOG 9.96%), Vertex Pharmaceuticals (VRTX -0.06%), Eli Lilly and Company (LLY 1.19%), and Meridian Bioscience (VIVO) all show solid potential to grow your investments significantly. While these businesses don't promise overnight riches, they also don't carry significant risks usually associated with growth stocks. Still, all of them have the potential to grow five times their current sizes in the years to come.
That's because these companies already have profitable bases that benefit from long-term trends that allow them to branch out with new ways to drive revenue and profitability.
Alphabet spells out continued growth
Alphabet's stock has risen 105% over the past five years. There's plenty of likely growth in store for this parent company of the search engine Google and video giant YouTube, despite its shares declining more than 29% this year.
Alphabet has built a huge competitive moat and remains highly profitable, even with online advertising revenue lagging this year. It will be hard for another search engine to come along and knock Google off, and the same holds for another video platform to challenge YouTube.
Alphabet has quarterly revenue improved by 168% over the past five years, and midway through 2022, that trend doesn't seem to be slowing down. The company reported six-month revenue of $137 billion, up 17.5% year over year, with an operating margin of 28.7%, slightly down from 30.5% in the same period last year.
Alphabet has long been a favorite of investors, but that also made it an expensive stock. However, it is now trading for around 19 times earnings, making it a bargain for such a profitable company.
Vertex Pharmaceuticals is building on its base
Biotech company Vertex Pharmaceuticals already has a solid franchise in therapies to treat hereditary pulmonary disease cystic fibrosis (CF). Now it is using its profits from those therapies to bankroll exa-cel, a potential blockbuster gene therapy it is developing with CRISPR Therapeutics. The company expects to complete its regulatory approval packet for exa-cel to the Food and Drug Administration by the first quarter of 2023. It could see profits from the therapy as early as midway through next year. Exa-cel is seen as a potential cure for two genetic blood disorders that now require frequent transfusions: beta thalassemia and sickle cell disease.
The stock's shares have risen 93% over the past five years, while its quarterly revenue has jumped 303% over that period. However, despite the bottom line exhibiting steady growth, its PE ratio has fallen to its lowest in the last five years to 24, as seen in the chart below. Nevertheless, with exciting prospects ahead, Vertex Pharmaceuticals stock can easily grow five times its current value in the years to come.
Data by YCharts.
Eli Lilly is not sitting on its laurels
It's hard, at first glance, to see Eli Lilly as a growth company because it was founded in 1876 by a Civil War veteran, but over the past five years, the pharmaceutical giant has seen its share price rise 283% while annual revenue has climbed a solid 33%.
The company's stock is up a little more than 23% this year. What is exciting investors, though, are Lilly's new potential drivers of income.
Lilly's latest diabetes drug, Mounjaro (tirzepatide), was launched earlier this year and has been the first drug to stimulates the GLP-1 and glucose-dependent insulinotropic polypeptide receptors to treat type 2 diabetes. The drug has been shown to improve blood sugar control and help patients lose weight, which is a significant factor for type 2 diabetes. In its first quarter, Mounjaro had $16 million in sales. The drug's potential as a weight-loss drug could make it a blockbuster.
Lilly has two other drugs that are seeing considerable revenue growth. Breast cancer drug Verzenio brought in $588.5 million in the second quarter, up 72% year over year, and diabetes drug Trulicity brought in $1.9 billion, up 25% over the same period last year.
The company has another exciting drug, donanemab, which has shown progress in slowing symptoms connected with Alzheimer's disease, and is awaiting approval by the FDA.
Meridian is testing the growth waters
Meridian Bioscience develops diagnostic systems and manufactures antigens, antibodies, and other diagnostic biological materials used by researchers and healthcare facilities.
The company's shares are up 54% so far this year and more than 116% over the past five years.
The company got a huge boost during the COVID-19 pandemic because its assays were needed for COVID tests and by companies searching for therapies to treat the condition. However, the trend that sparked the company's big gains isn't going away -- the need to quickly develop assays to diagnose and treat a variety of illnesses. Diagnostic testing has become a durable market where Meridian is a key player.
In the third quarter, Meridian reported revenue of $67.8 million, up 7% year over year, led by its diagnostics segment, which saw revenues rise 36% over the same period last year to $42.4 million. The company's revenue was $267.3 million through nine months, up 10.6% over the same period last year.
