Great businesses across a myriad of industries, including healthcare to tech, are shaping the future of the economy and changing the way people will live five, 10, or 20 years from now. As an investor, you can snag a piece of the action in these businesses and benefit from their growth trajectory through the decades.
Investors don't need to have a huge wad of cash to start buying great stocks, either. Even if it's a few hundred dollars a month, steadily putting cash into stocks and consistently growing their positions can help investors generate meaningful returns over time.
Here are two such super stocks that disappointed investors in five years will look back on and wish they had bought shares in.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 0.46%) continues to strengthen its foothold in the rare disease treatment industry with a robust lineup of drugs as well as a promising pipeline that could dominate multiple underserved markets. The company already has a chokehold on the cystic fibrosis treatment space, a market set to reach a valuation of $37 billion by 2030, according to some analyst estimates.
The reason for Vertex's dominance in this space is very simple: The company is the only one that has approved drugs on the market that treat the underlying cause of cystic fibrosis. It has four drugs that serve this function, which brought in combined revenue of $8.9 billion in 2022, $7.6 billion in 2021, and $6.2 billion in 2020. These four drugs have also enabled Vertex to grow its annual profits by more than 40% in the trailing three-year period alone.
The expansion of its drugs' use cases to younger and younger cohorts of patients has opened up Vertex's opportunity within the vast addressable market for cystic fibrosis treatments. The company is developing a cystic fibrosis drug with Moderna that's designed specifically for patients who can't take drugs in its existing lineup, a cohort of individuals that management currently numbers at around 5,000.
NASDAQ: VRTX
Key Data Points
Vertex is also working on stem cell therapies for diabetes, a non-opioid drug for acute pain ailments that could disrupt the existing pain management market, and a drug for patients with the genetic illness APOL1-mediated kidney disease, which if it gets the regulatory green light, would be the first drug approved to treat the underlying cause of this disease. The biggest news that investors should be following with this stock right now, though, is the ongoing approvals for Casgevy, the gene-editing therapy it developed with CRISPR Therapeutics.
Casgevy was recently approved in the U.S. and the U.K. for transfusion-dependent beta thalassemia (TDT) and sickle cell disease (SCD), and approvals are ongoing in other key markets. The European Union's regulatory decision for Casgevy is expected in the coming months. Both TDT and SCD are potentially deadly diseases for which the pre-existing care standard has been a range of ongoing treatments including regular blood transfusions. Casgevy poses a functional cure for both TDT and SCD, so the market opportunity here is extensive.
The rollout of this drug will be a gradual process, and Vertex is working with hospitals to establish authorized treatment centers where qualifying patients can receive these therapies. Moreover, because Casgevy is a gene-editing therapy, the process for each patient receiving the treatment is highly intensive. The patient has stem cells taken from them, edited, and infused back, while also undergoing chemotherapy to condition the cells for the infusion. Then comes a lengthy recovery process.
Casgevy is approved in the U.S. as a one-time therapy for patients 12 and up who either have TDT and require habitual blood transfusions or have SCD that causes them regular vaso-occlusive crises, which is a common and painful complication that SCD patients experience when the sickled cells obstruct blood flow. Under the Food and Drug Administration's approval, this means that 1,000 patients are eligible for this treatment at the time of this writing.
Still, this is only the beginning of the potential market opportunity for this drug. There are over 100,000 patients with SCD in the U.S. alone. And the drug is going to run with a target cost of $2.2 million per patient. Vertex Pharmaceuticals has a lot of room to run in the rare disease drug market. Investors who want to follow the stock's journey in the years ahead may want to consider putting some cash to work in this promising profit powerhouse of a healthcare business.
2. Microsoft
Microsoft (MSFT 1.12%) has been a mainstay in the tech industry for nearly five decades. The company has proven its ability to continuously innovate and refine its offerings through the years while remaining true to its core lineup of businesses. Even as the company has invested billions of dollars into artificial intelligence (AI), and is infusing this technology into virtually every corner of its business, it still rakes in eye-popping revenue and profits from some of its oldest products.
The company has an incredibly well-diversified business that spans tools and solutions including productivity software, cloud computing services; operating systems; computer, gaming, and mobile hardware; and gaming platforms. This extensive lineup of digital and physical products and services raked in a mouth-watering $57 billion in revenue in the most recent quarter, a 13% hike from the same period in the prior year.
Microsoft's operating income for the quarter totaled $27 billion, while net income came in at $22 billion. These two quarterly figures represented respective increases of 25% and 27% on a year-over-year basis. The company also had a staggering $144 billion in cash and investments on its balance sheet at the end of the quarter.
Microsoft Cloud revenue was a major driver of this growth, with sales totaling $32 billion, a 24% hike from the year-ago period. Broken down by segment, revenue from Microsoft's productivity and business processes segment, which includes products and services like Office and LinkedIn, and its intelligent cloud segment, which includes server products and Azure, clocked revenue increases of 13% and 19%, respectively, from one year ago.
NASDAQ: MSFT
Key Data Points
Perhaps a lesser-known side of Microsoft for some investors is its advertising business. The company's revenue from search and news advertising, which features properties like Microsoft Edge, Microsoft News, and Bing, rose 10% year over year in the most recent quarter. Bear in mind, Microsoft's advertising business brought in $12 billion in revenue in 2023, and the company was chosen as the exclusive tech and sales partner for Netflix's newly launched ad-supported tier.
Meanwhile, Microsoft continues to incorporate AI into everything from its productivity software to its Bing search engine (which features certain ChatGPT tools) to LinkedIn to newly launched products. The company recently introduced an AI assistant called Copilot that integrates with software like Teams, Word, Excel, and PowerPoint, along with its search engines Edge and Bing, and it is already being used by 40% of the Fortune 100 through an early access program.
The company's AI-powered cybersecurity solution, Security Copilot, is currently being used by entities like Fidelity National Financial, Bridgewater, and the government of Alberta, Canada, in an early launch as part of its enterprise defense suite Microsoft Defender. Then there's LinkedIn, which has just shy of 1 billion members worldwide and is now leveraging generative AI technology like AI-assisted messages for recruiters.
When it comes to finding great stocks that can stand the test of time and build wealth in your portfolio, you don't always have to look for the newest and shiniest toy. If you're searching for a mature business that is a profit powerhouse, provides consistent returns both through share price growth and dividends, and continues to innovate its products and services to meet the needs of its vast consumer audience, you don't need to look any further than this no-brainer tech stock.
