While many investors set a retirement goal of $1 million or more, there are many factors that will impact the amount you ultimately have set away for your later years. The length of time you spend investing in the stock market, the types of investments you own, the duration that you hold them, and the risk profile of the companies you gravitate toward can also impact your ultimate results.
Whether your retirement is many decades in the future or a bit closer on the horizon, consistently investing in stellar businesses regardless of what the market is doing can help move you closer to your long-term goals. On that note, here are two incredible stocks to consider buying right now as you build out your retirement portfolio.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 1.25%) is one my favorite examples of a profitable and steadily growing healthcare business with a considerable moat. The company is the singular leader in the cystic fibrosis treatment market and is the only one with drugs on the market that targets the root cause of this particular genetic illness. These drugs are called CFTR modulators, and Vertex Pharmaceuticals has commercialized four of them to date.
One of these drugs, Kalydeco, just garnered expanded approval from the U.S. Food and Drug Administration to treat cystic fibrosis patients as young as one month old, the first CFTR modulator ever approved for patients in this age group. This drug was Vertex's second highest producer in 2022, generating revenue of $553 million in the 12-month period alone.
Then there's Vertex's top-selling medicine, Trikafta, which raked in revenue of $7.7 billion in 2022, and as of late April is approved to treat children with certain mutations as young as two years of age, expanding access to nearly 1,000 additional members of the cystic fibrosis patient population.
While the multibillion-dollar cystic fibrosis treatment market is a steadily growing opportunity for Vertex Pharmaceuticals, the company is looking to other underserved spaces to supercharge its long-term growth. One of the drug candidates that could be close to commercialization in the next few years is VX-548, a non-opioid medicine targeting acute pain ailments. CEO Reshma Kewalramani gave an update on this candidate in the first-quarter earnings call:
VX-548 has been granted fast-track and breakthrough therapy designations for acute pain in the U.S. We initiated pivotal development last year and enrollment and dosing across the three phase 3 studies continue to progress nicely. These studies have been designed to support our goal of a broad, moderate-to-severe acute pain label that would enable prescribing and usage across multiple care settings, including at the site of care post-discharge and in the home.
Another drug candidate that could be approved as soon as this year is exa-cel, making it the first CRISPR gene-editing therapy to garner the regulatory green light. Importantly, exa-cel could serve as a one-time functional cure for two rare blood disorders: sickle cell disease and transfusion dependent beta thalassemia, and could represent billions of dollars in additional revenue for the business if approved.
Vertex boasts a robust cystic fibrosis drug portfolio and pipeline, not to mention a remarkable history of revenue growth and profitability (the company has raked in net income of about $3 billion in the trailing 12 months alone). Wall Street analysts think that the stock could present a 12-month upside of 17% in the mid-range and 41% on the high end from its current share price. I think these expectations are justified given the promising nature of Vertex's pipeline of drugs. All that considered, this healthcare stock might be worth adding to your buy basket in the near future.
2. Upstart
Upstart (UPST 3.90%) has been one of the stocks hardest hit by the ongoing market volatility over the last year and a half. However, if you've been watching the stock, you may have noticed that shares have rocketed up by about 80% in the past month alone, and more than 100% from the start of the year. While you should never base your decision to buy (or sell) a stock on share price movements alone, the spark of increased investor interest may be partially due to a series of promising updates in the company's first-quarter report.
Now, I've been covering Upstart closely for months now, and I've maintained throughout that this is a particularly risky stock. But the underlying power of the company's artificial intelligence and machine-learning driven platform, combined with its growing network of lending partners, could build a solid foundation for recovery when economic headwinds subside. From my viewpoint, that thesis continues to hold water.
Yes, revenue has declined, and the company is not profitable right now. Broadly speaking, this goes back to the reality that lending volume is still down. The elevated interest rate environment is making consumers more hesitant to apply for loans and institutional investors more hesitant to fund them. That is a reality Upstart will probably have to contend with for a few more quarters at least.
On the flip side of that, Upstart's platform automation is growing, its lending partner network is expanding, and it's working on rolling out new lending products. Importantly, it also just secured $2 billion in long-term funding over the next 12 months, which will handily reduce the amount of loans it's been carrying on its balance sheet. As of the end of the first quarter, 84% of all loans processed on the platform are completed without any human element involved, compared to 82% at the end of the fourth quarter of 2022. It now has 99 bank and credit union partners onboarded to its platform and counting, up nearly 100% year over year.
Adoption of its digital retail software, which includes features that allow easy contract signing and 100% online buying, is also rapidly gaining popularity with auto partners, including Honda Motor's Acura and Mercedes. Management also said in the first-quarter earnings call that the company is working on rolling out a new home equity line of credit product, representing its expansion into another lucrative sector of the broader lending market.
Upstart makes most of its money from referral fees that it charges to institutional partners (banks), as well as loan servicing fees and platform fees. As the lending environment becomes less constrained, which should occur if interest rates continue to stabilize or eventually fall over the next two years as many economists predict, banks and credit unions should be more willing to fund loans and consumers less fearful to apply for them. This recovery in lending volume would be great news for Upstart, considering it has continued to build this solid foundation of improving its underlying model and growing its partner network.
Upstart has work to do to get back to revenue growth and profitability. Some of these factors are beyond its control and go back to the lending environment. However, the growth that Upstart is seeing in its partner network, platform automation, and outside funding, even in a still-constrained environment, could bode very well for its future recovery as interest rates deflate.
