Earnings reports can be an investor's best friend. They don't just tell us about recent revenue and profit. They also offer us clues about a company's future. These reports don't have to be 100% positive. But if certain important points are bright, we might be looking at a buying opportunity.
That's the case for both AbbVie (ABBV 0.98%) and Intuitive Surgical (ISRG 2.21%). The companies each face specific challenges at the moment. But they've also given us some pretty good reasons to be optimistic about the future. Let's take a closer look at these two top stocks to buy this month and hold forever.
1. AbbVie
I'll get the bad news out of the way first. AbbVie's super blockbuster immunology drug Humira is set to face U.S. competition as of next year. Humira's international sales already are on the decline as rivals outside of the U.S. take market share.
But here's why I'm optimistic about AbbVie. The company's two newer immunology drugs -- Skyrizi and Rinvoq -- are on track to compensate for the loss. In the third-quarter earnings report, AbbVie said both drugs are set to generate $7.5 billion in revenue this year. And their combined revenue eventually should top that of Humira.
AbbVie also has a solid diversified portfolio. Along with immunology, it includes products in neuroscience, oncology, aesthetics, and other areas. In fact, the company is set to become the No. 1 globally by prescription drug market share as of 2026, according to Evaluate data.
AbbVie has a track record of earnings growth over time. Of course, Humira is a key contributor. But Skyrizi and Rinvoq look set to keep this positive trend growing. In the quarter, they represented almost 15% of the company's total revenue.
You'll also like AbbVie for its dividend. The company is a Dividend King. This means it's lifted its dividend payment for at least the past 50 years. This shows dividend growth is important to AbbVie. And that's great news for you as an investor.
AbbVie shares today are trading for 10 times forward earnings estimates, down from more than 12 earlier this year. This looks like a reasonable entry point considering the company's growth prospects -- and dividend policy.
2. Intuitive Surgical
Intuitive's main problem during the pandemic has to do with hospitals postponing surgeries with its surgical robots. That's happened during times when coronavirus hospitalizations have peaked.
Why does this hurt Intuitive? Because Intuitive actually makes more revenue through the sales of instruments and accessories needed for each surgery than from sales of its million-dollar robots.
The postponement of surgeries remains a risk. But as we head toward a post-pandemic world, this risk may be lower than it was in recent times. Things look like they're on the right track. In the third quarter, worldwide procedures using the flagship Da Vinci robot increased 20%. Revenue increased in the double digits.
And, importantly, Intuitive repurchased $1 billion of its own common stock. That's a sign of confidence in the company's future.
Like AbbVie, Intuitive has a history of earnings growth over time. Importantly, Intuitive also is a market leader. The company holds nearly 80% of the robotic surgery market, according to BIS Research. Considering the price tag on surgical robots, it's unlikely hospitals will easily switch over to a rival. So, Intuitive could remain ahead for quite some time.
Intuitive trades at 54 times forward earnings estimates. That's down from more than 72 back in January. At the same time, revenue is on the rise. So right now looks like just the right moment to get in on this exciting long-term story.
