With 2023 almost behind us, it's a great time to think about the new investing year just ahead. This doesn't mean you should completely revamp your portfolio, but instead consider what may be missing from your holdings -- and if you have some cash available and the price of a particular stock is right, make those additions.
One area to focus on is companies that generally offer steady earnings growth over time. Healthcare is the perfect place to find these players, since patients need their medicines or procedures no matter what the economy is doing. Within this group, you'll find tried-and-true names as well as up-and-coming players that may deliver an extra dose of growth.
Let's take a look at five of these top stocks to add to your portfolio before the new year.
Image source: Getty Images.
1. CRISPR Therapeutics
CRISPR Therapeutics (CRSP 0.34%) just reached a huge milestone, and another may be just ahead. The company recently won the world's first authorization for a CRISPR-based gene-editing treatment when the U.K. gave the nod to exa-cel (to be commercialized as Casgevy). U.S. regulators are set to decide on the blood disorders treatment for sickle cell disease this month -- then for beta thalassemia in March.
This is big because it represents product revenue just ahead, and this revenue could reach blockbuster levels. It's also a key event because it serves as a vote of confidence for the technology CRISPR Therapeutics uses across its pipeline. The company even has another candidate -- potential immuno-oncology treatment CTX-110 -- involved in a late-stage study that could support a regulatory request.
Meanwhile, CRISPR Therapeutics stock is trading at a much lower level than it did in the past, when we had less visibility about the future. Considering that this biotech is in the early stages of its story, over time, the shares could soar from today's level.
2. Eli Lilly
Eli Lilly (LLY 1.19%) has taken center stage thanks to its diabetes drug, Mounjaro, which doctors also have been prescribing for weight loss. In fact, Mounjaro and rival products have become so popular that patients have faced shortages of the drugs, as supply can't keep up with demand.
Lilly is increasing production capacity, and in more good news, the company recently won regulatory approval for the same molecule to specifically address weight loss. Lilly will sell the product as Zepbound. Mounjaro brought in $1.4 billion in sales during the most recent quarter, so there's reason to be optimistic about the potential of both drugs to drive growth.
But Lilly isn't about just one or two products or one treatment area. The company sells dozens of products in areas including immunology, cancer, and neuroscience. And these drugs helped the company increase revenue 37% in the quarter, with new products and growth products leading the gains.
Considering current growth and future potential thanks to new and high-growth products, Lilly shares, even after recent gains, are likely to head higher over time.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.06%) is known for its leadership in the global cystic fibrosis (CF) treatment market, and its CF drugs have brought in billions of dollars in earnings. This is set to continue into the next decade thanks to current products and a very promising candidate in pivotal development right now.
So we can be confident about the CF program generating billion-dollar earnings well into the future. But Vertex is about to offer patients and investors even more. The company partnered with CRISPR Therapeutics on Casgevy -- so will benefit from sales there.
And Vertex is working on a candidate to address the very common problem of pain, with VX-548 on track to complete its pivotal program by the end of this year. The company aims to share data from the trial early next year, and if it's positive, a commercial launch may not be far off.
You'll love Vertex for its all of the above -- and its reasonable valuation, as it trades for 23x forward earnings estimates.
4. Intuitive Surgical
Intuitive Surgical (ISRG 0.59%) is the worldwide leader in robotic surgery, with its flagship da Vinci system now installed in 8,285 locations. What I like most about Intuitive is its moat, or competitive advantage, which should ensure ongoing market leadership.
Robotic systems cost millions of dollars, so it's unlikely hospitals will easily switch to another provider if they're satisfied with the current platform. Also, most doctors train on the da Vinci, so they probably will support the idea of sticking with a system they know well.
I also like the fact that Intuitive generates most of its revenue not from selling the surgical robots -- but from selling the instruments and accessories needed for each surgery. This is great because it represents recurrent revenue and practically guarantees that every da Vinci sold or leased will keep generating income for Intuitive.
Intuitive shares have climbed this year, but they're still trading lower in relation to forward earnings estimates than they were a couple of years ago. This and solid future prospects make the stock a great deal today.
ISRG PE Ratio (Forward) data by YCharts
5. Pfizer
Pfizer's (PFE 0.55%) revenue surged to record highs last year thanks to its coronavirus vaccine and treatment, but today, the big pharma faces two challenges: a decline in coronavirus product revenue and upcoming losses of exclusivity of certain older blockbusters.
That's soured some investors on Pfizer, but this actually creates a top buying opportunity for the rest of us. The stock now trades for only 18.4 times forward earnings estimates.
Why buy Pfizer now? Because the company is set to compensate for patent losses and grow beyond them. Pfizer is in the middle of its biggest launch streak ever -- releasing 19 new products or indications over an 18-month period. It's completed 13 launches so far, showing it's well on the way to meeting the goal.
Pfizer predicts non-COVID program revenues could reach $84 billion by 2030, representing more than 60% growth from pre-pandemic revenue.
Meanwhile, you also can count on Pfizer for passive income -- the company is making dividend growth a priority and delivers a dividend yield that's higher than that of the S&P 500.
All of this makes Pfizer a top addition to your portfolio now, so that you'll benefit from passive income in 2024 and likely share performance over time.
