U.S. stock markets are in a precarious place. Bargain hunters bid up a wide swath of growth equities during the first month of the year, but these same equities, on balance, found it hard to retain these monthly gains over the course of February.

The core issue at play is the uncertainty surrounding the future of inflation, U.S. interest rates, and the global economy. Under a best-case scenario, the Federal Reserve's aggressive rate hiking policy will steadily tamp down consumer demand without sparking an economic recession. On the flip side, history has shown that a heavy-handed Federal Reserve can have decidedly negative impacts on the broader economy. 

A businessperson inspecting a downward trending arrow.

Image source: Getty Images.

The point is that another sharp correction in U.S. equity prices isn't out of the realm of possibility in 2023. Here are three top-flight growth stocks to buy hand over fist if the broader markets swoon

1. Eli Lilly

Eli Lilly (LLY 1.06%) is a supercharged big pharma stock. Despite its decision to slash insulin prices (a product that makes up approximately 15% of the drugmaker's total sales) by 70%, Lilly is still expected to post healthy levels of top- and bottom-line growth in the years ahead. The reason is the company's red-hot innovation engine.

By investing heavily in research and development, Lilly has built a dominant diabetes franchise, headed up by drugs such as Mounjaro, Trulicity, and Jardiance. It also has high-value products in immunology with Taltz, and cancer with Verzenio. On the pipeline side of things, Lilly is trialing several potential blockbusters in atopic dermatitis, immunology, and Alzheimer's disease. Lilly, as a result, is expected to post high-double-digit levels of revenue growth in 2024. 

The problem with Lilly's investing thesis is its heady valuation. Even though its shares have retreated in 2023, Lilly's stock is still being valued at over 36 times forward earnings. The average price-to-earnings ratio within its peer group is roughly 15. So, in short, Lilly should be a top stock to buy in a marketwide correction. 

2. Madrigal Pharmaceuticals

Madrigal Pharmaceuticals (MDGL 1.51%) is a late-stage drug developer. The company's core value proposition centers around the nonalcoholic steatohepatitis (NASH) drug candidate resmetirom. In December 2022, Madrigal reported that resmetirom hit the mark in a pivotal stage trial for NASH. The company thus plans on seeking an accelerated approval in this setting from the Food and Drug Administration (FDA) in the first half of 2023. 

If Madrigal nabs the first FDA approval in NASH, the company will likely become a top buyout target. The simple reason is that NASH is worth tens of billions in potential drug sales, and big pharma has had no luck in developing its own NASH candidates over the past decade. So, even though there is a fair amount of regulatory risk at play with this name, Madrigal's shares may indeed be worth buying on a pullback. 

3. Vertex Pharmaceuticals

Vertex Pharmaceuticals (VRTX -1.19%) is a value-creation juggernaut. While most growth equities were in retreat mode last year, Vertex's stock stormed higher by a whopping 31.5%. Investors stayed the course with this elite biotech stock last year thanks to the company's high-growth cystic fibrosis (CF) franchise. Over the course of 2022, Vertex's CF drug sales rose by 18% to $8.9 billion. 

What's more, Vertex's strong patent portfolio in CF and first-mover advantage are expected to keep the company's top line churning higher for the remainder of the decade. Even so, the drugmaker is on the cusp of bringing additional growth drivers online. For instance, Vertex's CRISPR Therapeutics-partnered blood disorder therapy, exa-cel, could be its next blockbuster product. The two companies recently filed for exa-cel's approval in the U.S., the U.K., and the European Union. 

Like Lilly, Vertex's stock also sports a premium valuation. At 22.6 times trailing earnings, Vertex's shares are some of the most expensive in the pharmaceutical industry. That doesn't mean that this premium valuation isn't warranted, but this biotech stock would be a far more compelling buy under 20 times trailing earnings.