Getting your portfolio to the $1 million mark can be a great accomplishment. It can mean having to work less and potentially even retiring earlier. Although it can't buy happiness, money can definitely go a long way in making your life easier. Investing early and often may help make the prospects of becoming a millionaire much more realistic.
But even if you have the money to invest, you need to make sound investments that can deliver long-term growth. Below, I'll look at whether healthcare company Eli Lilly (LLY 1.83%) has the potential to be an investment that can help you get to $1 million.
Products that could be cornerstones for the business
From a growth angle, there's a lot to love about Eli Lilly. Investors only need to look at the hype and excitement behind Novo Nordisk's weight-loss drug Wegovy (it's hard to find it anywhere) as reason to be incredibly bullish on Eli Lilly's own weight-loss drug candidate -- tirzepatide.
NYSE: LLY
Key Data Points
Tirzepatide showed incredibly promising results in its trials last year where people lost up to 22.5% of their weight. Wegovy's results have been a bit more modest with the average weight loss at around 15%. If tirzepatide can obtain approval from the Food and Drug Administration (FDA) for weight loss -- it is approved to treat type 2 diabetes under the brand Mounjaro -- then that can make Eli Lilly's stock, which trades at a not-so-cheap 55 times earnings, look like a deal. The company plans to complete its rolling submission to the FDA for tirzepatide as a treatment for obesity by the end of April.
Another promising opportunity for Eli Lilly is in the area of Alzheimer's. Its donanemab outperformed Biogen's Aduhelm (which obtained accelerated approval in 2021) in a head-to-head trial; Lilly's treatment was more effective in reducing amyloid plaque in the brain. A decision by the FDA on donanemab could come as early as this month.
Those are just a couple of the most promising assets in Eli Lilly's pipeline, which currently features more than 20 projects that are in phase 3 trials.
It has the resources it needs to grow and pay dividends
All the growth potential in the world would be for naught if a company didn't have the resources to be able to execute on its opportunities. Eli Lilly's core business is solid, with the company consistently delivering strong margins.
LLY Profit Margin (Quarterly) data by YCharts
Another important aspect is free cash flow, which is crucial to not just growing but continuing to pay Eli Lilly's dividend, which currently yields 1.2%. Over the past few years, the company has averaged quarterly free cash flow of $1.2 billion -- more than the roughly $880 million that Eli Lilly has been paying out in cash dividends over the past few quarters.
LLY Free Cash Flow (Quarterly) data by YCharts
Potential to be a millionaire-making investment
Although its high valuation may dissuade some investors, Eli Lilly's business is solid and even at market capitalization of $350 billion, it has the potential to be worth much more. At the very least, the company looks in good shape to be a market-beating investment as it has been in the past. If the stock were to average a growth rate of 13% over a period of 25 years, then a $50,000 investment in Eli Lilly today would be enough to get you to $1 million.
Obviously, that can be a lot of money for investors to set aside in just one stock. A more sound strategy may involve investing in Eli Lilly and other promising growth stocks to help diversify your portfolio for the long haul. But it's clear from the company's attractive prospects and its strong financials that Eli Lilly can be a solid, long-term investment to buy and hold for decades.
