Bear markets and bull markets come and go, so it's best to avoid building your portfolio around one specific market phase. Instead, pick up shares of companies with potential to grow your wealth over time. If you're a cautious investor, you might favor dividend players and companies with a steady earnings track record. If you're aggressive, you might go for younger players, ready to launch new products.
In both cases, you can find these sorts of stock in the world of healthcare. If you've got $5,000 to invest, or even less, now is a great time to pick up shares of three companies that, all together, may offer you a combination of growth and security. Depending on your comfort with risk, you can decide which one to weigh most heavily in your portfolio. Let's take a look at these top long-term buys to invest in now.
Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.06%) brings you a solid track record of growth -- plus potential for more ahead. The big biotech is the worldwide leader in cystic fibrosis (CF) treatment, with its leading treatment, Trikafta, bringing in billions of dollars in revenue annually. That and other CF products also have delivered ongoing profit growth.
The company is testing a new CF treatment in phase 3 studies that may even beat Trikafta, paving the way for Vertex to hold onto its leadership at least until the late 2030s. Meanwhile, Vertex may be about to launch its first potential blockbuster beyond CF. Regulators are set to decide on its blood disorders treatment candidate, exa-cel, in December.
Vertex also is working on several other compelling candidates, including one to treat the common problem of pain. That candidate is involved in a phase 3 study.
Today, Vertex shares are trading near an all-time high -- but they're still priced at only about 24 times forward earnings estimates. This looks cheap considering the company's market leadership and growth potential, and that's why I would invest part of my $5,000 in this winning biotech stock.
Moderna
Moderna (MRNA 1.69%) offers you a bargain buy for future earnings that could be enormous. Well, then why have the shares stagnated? you might ask. That's because investors continue to focus on sales of the company's only product -- the coronavirus vaccine -- and demand is on the decline.
But here's why you shouldn't worry. Moderna is at the start of its growth story thanks to a vast pipeline of programs. And some of those programs are nearly ready to bear fruit. The biotech aims to launch 15 new products in the coming five years. And it forecasts they could result in as much as $30 billion in revenue. That surpasses Moderna's peak vaccine revenue of $18.4 billion, reached last year.
Moderna stock may not take off right away, though, as the focus on Moderna's coronavirus vaccine might continue -- and even if vaccine sales beat estimates, that may not be enough to boost the stock.
The good news is all of this offers long-term investors an opportunity to get in on this past and future winner at an excellent price.
MRNA PE Ratio (Forward) data by YCharts
Johnson & Johnson
Now, let's talk about the player that offers you security. And that's pharma giant Johnson & Johnson (JNJ -0.46%). As a Dividend King, J&J has increased its dividend payments for more than 50 years, showing the company has a true commitment to rewarding shareholders. And with free cash flow of more than $14 billion, J&J also has the financial situation to keep those increases going.
Dividends are great because they offer you passive income no matter what the market or this particular stock is doing. And with J&J, you can expect these payments to grow over time.
J&J also could offer you some growth moving forward. That's because the big pharma company recently made a move that should boost earnings in the coming years. J&J completed the spinoff of its consumer health unit into a separate entity called Kenvue.
This allows J&J to devote more resources to its higher-growth businesses of pharmaceuticals and medtech. The Kenvue operation also left J&J with more than $13 billion in proceeds, which it could use to acquire a program or company to lift growth. J&J's most recent acquisition, the purchase of heart pump maker Abiomed, was a success -- with Abiomed products now driving growth in J&J's medtech business.
Today, J&J shares trade for only 15 times forward earnings estimates, a bargain for this top dividend player that may offer you an earnings growth story too.
