As Warren Buffett once said, "If a business does well, the stock eventually follows." While there are no guarantees with investing, and one has to have a certain level of risk aptitude to put capital into stocks, the market has proven time and time again to be a remarkable vehicle for building wealth.
If you have the capital and risk tolerance for putting money into growth stocks, there is certainly no shortage of companies that present compelling opportunities for the long term. Here are two such names to consider buying right now, one that the market has discounted over the last year and one which has actually beaten the S&P 500 in that period.
Let's dive right in.
1. Intuitive Surgical
Intuitive Surgical (ISRG -0.55%) is trading down about 13% from its position one year ago, just slightly above the S&P 500's decline of about 10% in the trailing-12-month period. Fluctuations in procedure volumes due to COVID-19 resurgences have been evident in some recent financial reports, and the impact of the challenging macroeconomic environment has even curtailed the trajectory of medical provider spending, all of which has contributed to the more moderate pace of growth that Intuitive Surgical has reported recently compared to prior years.
Still, Intuitive Surgical closed out 2022 with 7,544 of its flagship da Vinci Surgical Systems installed worldwide, up 12% from the close of 2021. Moreover, procedures using the company's da Vinci systems jumped 18% in 2022 compared to the prior year but were up 15% on a three-year compound annual growth rate clip.
The company is also seeing continued adoption of its Ion systems, used in minimally invasive lung biopsies. The Ion was approved by the U.S. Food and Drug Administration in 2019. Intuitive Surgical placed 67 of its Ion systems for customers in the final quarter of 2022, compared to 31 in the same quarter in 2021, while ending the year with a total installed base of 321 Ion systems. Procedures using the Ion skyrocketed 169% in the final quarter of 2022 compared to the same three-month period in 2021.
This is a consistently profitable business, revenue is growing at a solid clip, and Intuitive Surgical continues to steadily increase its installed base of surgical robotic systems -- all green flags for the growth of this business over the long term. The company generated $6.2 billion in revenue in 2022, while earnings came to $1.3 billion.
Even if a full-fledged recession curtails growth in the near term, the tailwinds driving adoption of surgical robotics systems -- a multibillion-dollar industry in which the company currently maintains a market share of around 80% -- and the fact that many of the procedures these systems support are essential and not elective, all bode well for the continued trajectory of this healthcare business.
Given these factors, the current market could present a rare buying opportunity to invest in this supercharged business at a discount.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -1.02%) has seen revenue and profits soar by 260% and 1,160%, respectively, over the trailing decade on the back of its portfolio of cystic fibrosis medicines. The stock is up about 20% over the trailing 12 months alone. As the company that bears the distinction of being the only one with drugs on the market that treat the root genetic cause of cystic fibrosis, it's not hard to see why this has translated to incredible revenue growth and profits for the company over the years.
Still, even with a market footprint that vast, management estimates that there are upwards of 20,000 members of the global cystic fibrosis patient population that could take these drugs but aren't yet doing so. And there are about 5,000 more at least who have cystic fibrosis but can't benefit from Vertex's existing portfolio of drugs, a target market that the company is working to penetrate through an mRNA-based cystic fibrosis drug candidate it's currently developing with Moderna.
Another extremely promising candidate is also the most likely to be added next to Vertex's slate of approved drugs. Called exa-cel, it was co-developed as part of a long-standing partnership with CRISPR Therapeutics and stands to be the first CRISPR therapy to garner regulatory approval. As a potential one-time functional cure for two rare blood disorders, exa-cel could also revolutionize the standard of care for these diseases. Vertex just wrapped up its regulatory submission package for exa-cel in the U.S. and has already completed its submission packages in the U.K. and Europe.
A third notable mention from Vertex's rapidly growing product pipeline is VX-548, its non-opioid drug candidate for acute pain. Not only is the potential addressable market for this drug in the billions of dollars but as Stuart Arbuckle noted in the 2022 earnings call:
The current standards of care are NSAIDs [Non-steroidal anti-inflammatory drugs] and acetaminophen at one end of the spectrum, which are non-addicting but offer limited pain relief and can pose GI and liver toxicity concerns. And at the other end of the spectrum are opioids, which provide effective pain relief but have many undesirable side effects, including nausea and somnolence and have significant abuse potential ....This leaves a vast gap in the treatment landscape for a medicine like VX-548 and with strong efficacy, a desirable benefit-risk profile, and without abuse potential, given it is peripherally acting.
The growth story for this business is likely only in its very early stages, a fact that investors shouldn't hesitate to jump on. The stock could easily follow this promising trajectory to skyrocket significantly higher over the next decade, bear market or not, and given its long-term potential, this could create a buying proposition that begs a second look.
