Gene-editing healthcare therapies and renewable energy are two of the strongest trends today and for the next few years. Both sectors are worthy of sizable investments, particularly if you're looking to make long-term investments. If you have $5,000 that you don't require for necessary, or near-term, expenses, then these investing ideas could be a good way to make your money work for you.
CRISPR (clustered regularly interspaced short palindromic repeats) gene editing was discovered in 2012, and has the potential to revolutionize some aspects of health care. In some cases, gene-editing therapies have the potential to functionally cure, rather than just treat, genetic diseases.
Renewable energy is a big trend because the dangers of climate change have made clear the world's need for clean and sustainable sources of energy such as solar and wind power that do not produce greenhouse gasses.
Gene editing will play a huge role in healthcare
Gene editing enables scientists to make precise changes to human DNA, giving us new ways to treat diseases, especially hereditary ones. There are several gene-editing techniques, but the most promising so far appears to be CRISPR-Cas9, a system that uses guide RNA to focus on a particular DNA sequence. The Cas9 enzyme cuts the DNA, allowing changes to the DNA sequence.
Some hopeful CRISPR-Cas9 therapies are designed to correct the specific mutations that lead to diseases such as cystic fibrosis or sickle cell anemia. But these tools could also be used to inactivate genes that cause cancer, or to introduce new genes to help fight diseases.
Best stock to play the trend: There are plenty of gene-editing companies, but one that has plenty of upside and relatively low risk is Vertex Pharmaceuticals (VRTX 0.35%).
The biotech company had $8.9 billion in revenue last year and $3.3 billion in net income, up 18% and 42%, respectively.
For 2023, management expects revenue between $9.55 billion and $9.7 billion, a rise between 6.9% and 8.6%, respectively. Vertex, as of the first quarter, had $11.5 billion in cash and equivalents, giving it plenty of money for research and development. Its first-quarter revenue was nearly $2.4 billion, up 13% year over year, and it expects product revenue this year to be between $9.55 billion and $9.7 billion, up 6.9% to 8.6% from last year.
Vertex's shares are up 17% so far this year. The company has a portfolio of traditional cystic fibrosis drugs, led by the combination therapy Trikafta, which had $1.4 billion in sales in the first quarter, up 3% year over year.
But on the gene therapy side, it is developing collaborating with CRISPR Therapeutics (CRSP 2.09%) on the development of exa-cel, which is expected to be approved as a groundbreaking treatment for transfusion-dependent beta-thalassemia and sickle cell disease. Both ailments are inherited blood disorders, and in phase 3 trials, exa-cel was shown to be effective at functionally curing the conditions.
Vertex and CRISPR have submitted their rolling biologics license application for the therapy, and expect an approval decision from the Food and Drug Administration this fall.
Renewable energy has multiple tailwinds
Renewable energy stocks have been known for their volatility, but overall, because of innovation, consumer preferences, and government subsidies, renewable energy is becoming more affordable and efficient, making it a more viable option for meeting the world's energy needs.
There are plenty of ways to play this trend. There are solar power stocks, companies that specialize in wind power, and others that focus on hydroelectric or biomass energy sources. Unfortunately, many of these companies are still fairly young, which makes them somewhat speculative investments.
Best stock to play the trend: Thanks to the increased government funding that the Inflation Reduction Act will provide to support the growth of renewable energy sources, as well as rising consumer interest in green energy, there are plenty of attractive renewable power stocks. I particularly like Brookfield Renewable Partners (BEP 3.38%) because the limited partnership owns a diversified portfolio of renewable power assets, including hydroelectric, wind, solar, renewable natural gas, and biomass. With its diversified operations, regardless of which segments of the renewable power sector are doing best, Brookfield Renewable is likely to benefit. It is also a great hedge against inflation because its power supply contracts include regular inflation-driven rate increases.
The company's portfolio includes 25,700 megawatts of installed capacity and a development pipeline of roughly 126,000 megawatts of renewable power assets in North and South America, Europe, and Asia.
Brookfield's shares are up more than 18% so far this year and over 82% in the past five years. It also has increased its revenues in 10 of the past 11 years. In the first quarter, it reported funds from operations (FFO) of $275 million, or $0.43 per share, up 13% over the same period last year. Over the past decade, it has improved annual FFO by 128%.
Brookfield Renewable has focused on growth, including taking part in a $12.4 billion takeover of the energy market business side of Australia's second-largest energy generator, Origin Energy, in March. Brookfield Renewable plans to retire Origin's coal-fired power plants and replace them with 14,000 megawatts of renewable energy.
The utility company also offers an attractive dividend that will help investors weather any short-term share price volatility and keep their eyes on its long-term progress. Brookfield Renewable raised its dividend by 5.5% this year to $0.34 per share, which at the current stock price gives it a yield of around 4.2%, more than twice the S&P 500's average yield. The company has boosted its payout for the past two years, and management has said it aims to increase the dividend by 5 to 9% every year. The FFO payout ratio is high at 78.4%, but the company's steadily increasing cash flows make that less of a concern.
