What are some unstoppable stocks to buy right now? Three Fool.com contributors think they've found three stocks that qualify -- and they're all in the healthcare sector. Here's why they picked Axsome Therapeutics (AXSM 0.27%), Eli Lilly (LLY 1.19%), and Vertex Pharmaceuticals (VRTX -0.06%).
Axsome: Modestly priced stock with solid upside
David Jagielski (Axsome Therapeutics): One promising growth stock that investors may be overlooking today is Axsome Therapeutics. With a market capitalization of around $3.2 billion, this is still a fairly small biotech stock for investors to load up on before it gets much bigger.
What's promising for Axsome is that the business has a couple of great assets in its portfolio. This is no longer a clinical-stage company; Axsome is now consistently bringing in revenue. In the trailing 12 months, the company has reported more than $182 million in revenue. While its losses are higher than that total, investors have plenty of reasons to be bullish on the company's future.
Axsome is generating revenue from narcolepsy treatment Sunosi, which it acquired last year from Jazz Pharmaceuticals. Auvelity, its treatment for major depressive disorder, obtained approval last year and is now the company's top product, generating just under $38 million in sales for the period ended Sept. 30. The fast-acting treatment (which shows results in as little as a week) could generate up to $1.8 billion in revenue at its peak.
In addition, Axsome has more promising assets in its pipeline, including AXS-05, a treatment for agitation associated with Alzheimer's disease. The U.S. Food and Drug Administration (FDA) has granted it Breakthrough Therapy designation in this indication.
Axsome should be worth more than it is, but with short interest at 20% of its float, there are still many investors betting against the healthcare stock. Short interest has come down this year, but with plenty of bears still out there, it is difficult for the stock to gain traction. However, with more growth on the horizon and its financials potentially getting better as Auvelity brings in more revenue, Axsome is a stock that could prove the short sellers wrong.
Investors who are OK with some risk and volatility could achieve significant returns by taking a chance on this struggling stock.
Eli Lilly: This giant drugmaker keeps getting bigger
Keith Speights (Eli Lilly): Eli Lilly has been a big pharmaceutical company for a long time. For much of its existence, though, it wasn't anywhere close to being the biggest. Not anymore. Earlier this year, Lilly jumped into the No. 1 spot based on market capitalization.
I predict that the newly crowned biggest drugmaker in the world will grow even bigger over the next decade -- and my confidence level is quite high. Why? Consider this: Lilly expects to rake in total revenue of $33.4 billion and $33.9 billion this year. But just one of its drugs is projected to generate peak annual sales of at least $50 billion in the future.
I'm referring to tirzepatide. Lilly has marketed it under the brand name Mounjaro since 2022 in treating type 2 diabetes. Last month, the company won FDA approval for the drug for chronic weight management. It's using the brand name Zepbound for this indication.
Mounjaro/Zepbound isn't Lilly's only rising star, though. The company claimed three cancer drugs with year-over-year sales growth of at least 50% in the third quarter -- Verzenio, Tyvyt, and Retevmo. Two other drugs in Lilly's current lineup delivered double-digit percentage sales growth: Jardiance and Olumiant.
The company's pipeline should yield additional growth drivers. Lilly expects an FDA approval decision for donanemab in treating Alzheimer's disease in the first quarter of 2024. Morningstar projects peak annual sales of over $7 billion for the drug.
Lilly also hopes to secure FDA approval for lebrikizumab in treating atopic dermatitis after initially receiving a complete response letter from the agency, turning down approval due to inspection findings at a third-party manufacturer.
Vertex: The beginning of a new era
Prosper Junior Bakiny (Vertex Pharmaceuticals): Biotech leader Vertex Pharmaceuticals has been on a tear over the past decade. It has generated steadily increasing revenue, earnings, and cash flow. Naturally, its stock market performance has been well above average. In short, long-term investors in Vertex are sitting pretty right now.
But why has the drugmaker been so successful? The biotech holds a monopoly in the market for therapies that treat the underlying causes of a rare disease called cystic fibrosis (CF). Vertex's performance in the past 10 years is entirely due to its fantastic success in this space. It has routinely developed newer and better medicines to treat CF, and it is still doing so.
However, Vertex recently received approval in the U.K. for a gene-editing treatment called Casgevy (exa-cel). Casgevy treats two rare blood diseases -- sickle cell disease and transfusion-dependent beta-thalassemia -- that substantially burden patients, their families, and healthcare systems.
Casgevy boasts blockbuster potential. With it in its portfolio, Vertex is starting a brand-new era -- one in which its financial results no longer depend only on its CF therapies. Vertex set a goal to launch five brand-new products in the next five years. If Vertex is successful, at least three of them won't be CF medicines.
Meanwhile, the biotech's revenue and earnings are still growing. And that won't stop anytime soon. Things should only get better from here on out. I think this stock is worth holding onto for years to come.
