While the day-to-day machinations of the financial markets have left many investors feeling discouraged lately, stocks can still be a fantastic way to build and sustain wealth over a period of many years.
You don't need to find one amazing stock in order to build a portfolio that consistently generates returns with time. By continuing to diversify your portfolio as you build positions in wonderful companies in both up and down markets, you can set yourself up for success over the long term while taking out the guesswork.
If you are in a position to invest in the market right now, here are three revolutionary stocks to consider adding to your buy list.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 1.69%) is at the forefront of cystic fibrosis (CF) treatment, a space on track to eclipse $17 billion by the end of the decade. Diagnoses of CF are on the rise worldwide, and the disease remains one of the most common genetic illnesses in the U.S. by far.
Therapeutic drugs designed to target the root cause of CF and enhance a patient's quality of life, known as CFTR modulators, remain key to managing the disease for thousands of people globally. The introduction of CFTR modulators to the market has been integral to improving outcomes for patients. Vertex sells the only CFTR modulators that have been approved by regulatory authorities to date.
Its top-selling blockbuster drug, Trikafta, captured more than 90% of the cystic fibrosis addressable market when it was approved in the U.S. in 2018. Vertex has also won additional approvals for Trikafta and its three other cystic fibrosis drugs in recent years, which have extended these therapies to younger and younger cohorts of patients.
In the most recent quarter alone, Vertex reported an 18% surge in revenue from the year-ago period to $2.3 billion, while net income rose 9% year over year to $931 million. The company was sitting on a stockpile of cash and investments worth $10 billion at the end of the quarter.
Meanwhile, its pipeline includes many promising candidates. These include a therapy it's developing with Moderna for CF patients who can't take CFTR modulators. And there is a therapy for a rare blood disorder developed with CRISPR Therapeutics that could be a one-time functional cure for transfusion-dependent beta thalassemia as well as severe sickle cell disease, and could be approved in the coming months.
The healthcare stock is just in the early stages of realizing its long-term growth story, and now could be an excellent time for investors to take a second look at this resilient company.
2. Shopify
Shopify (SHOP -0.27%) might not be giving investors the share-price returns it was in the earlier days of the pandemic, but the business is still going from strength to strength.
The e-commerce platform has remained unprofitable in recent quarters because of a combination of the strong U.S. dollar, losses from its equity holdings, and aggressive investments in its business infrastructure and merchant tools. And these have been just a few of many factors that have cut into the bottom line.
However, the company is still growing revenue at a strong clip, not just on a year-over-year basis but compared to pre-pandemic levels as well. In the most recent quarter, Shopify reported that revenue was up 22% from the year-ago period, spurred on by a 26% spike in merchant-solutions revenue and a 12% jump in subscription solutions revenue. Meanwhile, compared to the same quarter in 2019, revenue grew at an impressive 52%.
Shopify's focus on merchant solutions to retain more buyers and sellers on its platform is key to maintaining durable growth while expanding its footprint in the lucrative yet highly competitive e-commerce space. For example, in spring of 2022, Shopify introduced a new set of tools for merchants called Audiences, designed to help sellers better target and convert potential buyers.
Just a few months later, the company announced its acquisition of Deliverr. This represented a key addition to its fulfillment network designed to shorten processing times and enable merchants to rely on Shopify for the entire supply chain.
Economic headwinds may be discouraging investors from looking at tech stocks that are vulnerable to changes in consumer spending. But Shopify still looks well-positioned for growth in the years ahead as a premier platform for entrepreneurs around the world to launch and scale a business. In a down market, this could make the company a compelling buy for risk-tolerant investors.
3. Etsy
Etsy (ETSY 0.95%) is another e-commerce stock that has lost favor with many investors lately. But this could be a result of a shortsighted assessment of the company, given its long-term potential.
The most recent quarter saw Etsy grow its revenue 12% from the year-ago period, to just shy of $600 million. Some investors were taken aback by the $963 million net loss the company recorded for the three-month period. This was mostly from a one-time non-cash impairment charge it took for its prior purchase of Depop in 2021, a year when arguably many companies overpaid for acquisition targets in a very different market environment.
Etsy is also growing at an impressive pace compared to pre-pandemic levels, a more reasonable basis on which to assess its growth. As of the third quarter of 2022, Etsy's gross merchandise sales of $3 billion represented an 150% increase compared to the same quarter of 2019.
The e-commerce industry as a whole is set to reach a valuation of $62 trillion globally by 2030. Within that market, there are numerous sub-sectors, including speciality, handmade, and vintage goods, which is Etsy's focus.
Management reports that this sector alone represents a $2 trillion addressable market for the Etsy platform, not counting the opportunities that the more recent additions of other platforms like Depop could present in the years ahead.
Etsy operates at a scale untouched by virtually any direct competitor, which bodes well for it to recover from the near-term economy and deliver the returns that shareholders want.
