The stock market delivered a strong performance over the trailing-12-month period. That makes what Eli Lilly (LLY 1.81%) and Booking Holdings (BKNG 0.60%) have accomplished over this period even more impressive, as both companies easily crushed the S&P 500.
However, it's not too late to buy either stock. Eli Lilly and Booking Holdings -- although in very different industries -- boast excellent prospects that should allow them to deliver market-beating returns through the next decade and beyond. Here's the rundown.
NYSE: LLY
Key Data Points
1. Eli Lilly
Eli Lilly vowed to launch up to four new products on the market last year. The company was only able to reach half of that total in the U.S., as it encountered regulatory roadblocks for the other two. Most biotechs in this situation would have seen their shares drop, but not Eli Lilly. The company's stock still significantly outperformed the broader market.
Here's one big reason. Eli Lilly's newly approved diabetes medicine, Mounjaro, is a game changer. It has a novel and unique mechanism of action among a sea of competitors in this field. Last year, it earned approval in treating obesity, a market where it will carry the brand name Zepbound. This medicine could hit peak annual sales of $25 billion, according to some analysts, and go on to become one of the best-selling medicines in the history of the industry.
If that seems too optimistic, consider that Mounjaro was first approved in May 2022, yet it generated nearly $3 billion in revenue through Sept. 30 of last year -- and that was before its approval as an obesity treatment. There is no doubt that Mounjaro has an incredibly bright future.
It will have some help, too. Eli Lilly is awaiting approval from the U.S. Food and Drug Administration for donanemab, a potential Alzheimer's disease treatment. The company's other newer medicines will also be important, as will older ones, such as the cancer drug Verzenio.
What does all this mean for investors? Eli Lilly should record excellent financial results regularly. Analysts see the company's earnings per share growing by 27% annually on average through the next five years.
And the strong underlying business should help Lilly sustain its excellent dividend program. The company's payouts have more than doubled in the past five years alone. That's just one more reason why Eli Lilly stock is an excellent buy-and-hold pick.
NASDAQ: BKNG
Key Data Points
2. Booking Holdings
People love to travel, and Booking Holdings makes the trip easier. The company runs a platform that offers travel arrangements, from flights and hotels to rental cars and activities. Booking Holdings is one of the most prominent players in this field. The company's ecosystem of accommodations spans 220 countries and territories, and features millions of properties from hotels to private residences.
Booking Holdings was on fire last year, largely thanks to strong financial results. For the first nine months of 2023, the company's revenue increased by 27% year over year to $16.6 billion, while its net income of $4.1 billion was more than double that of the year-ago period.
There is plenty of growth left ahead. The travel and hospitality industry should continue to provide plenty of opportunities, especially as Booking Holdings improves its platform. Last year, it launched a trip planner powered by artificial intelligence (AI) that could meaningfully improve the company's financial results.
Furthermore, Booking Holdings arguably benefits from the network effect -- the value of its platform increases with use. People looking for accommodations for their trips are likely to turn to a company like Booking Holdings that already has a vast ecosystem available. And the more customers flock to its platform, the more it becomes attractive to hotels and other players on the sell side of the equation.
That's how Booking Holdings can remain a leader in this niche despite stiff competition from Airbnb, among others. Booking Holdings' competitive edge, large ecosystem, and continuous attempts to improve its platform should allow it to maintain this momentum for a while. And over the next decade (and beyond), the company is in an excellent position to deliver superior returns.
