My first response when thinking about the ultimate growth stock to buy with $1,000 right now was to go with a high-flying AI stock. But the more I deliberated, the less comfortable I was choosing one of those stocks.
Don't get me wrong. I like (and own) several great AI stocks. However, I could easily name downsides to all of them. So which stock do I think is the ultimate pick to buy with $1,000 right now? After careful consideration, my answer is... Vertex Pharmaceuticals (VRTX -0.06%).
Accentuating the positives
The song "Ac-Cent-Tchu-Ate the Positive" became popular decades before I was born. It came to mind, though, as I mentally reviewed multiple ultimate growth stock contenders. Vertex has plenty of positives to accentuate.
This big biopharmaceutical company is highly profitable. Vertex generated earnings of over $3.6 billion last year on revenue of close to $9.9 billion. It also has a big cash stockpile totaling $13.7 billion.
Vertex doesn't just have one or two paths to growth; it has at least half a dozen. The one that's front and center right now is the company's cystic fibrosis (CF) franchise. The company's four approved CF drugs have been the source of its success so far. Vertex plans to file for approval this summer for a triple-drug combo that will likely become its most profitable CF therapy yet.
Meanwhile, the big biotech already has its first non-CF therapy on the market. Casgevy won regulatory approvals in recent months in treating (actually, curing) two rare blood disorders, sickle cell disease and transfusion-dependent beta-thalassemia. The gene-editing therapy could reach peak annual sales of $3.9 billion, according to Goldman Sachs analysts.
Look for another regulatory filing in mid-2024, too. Vertex's pain drug VX-548 could have tremendous commercial potential. It effectively alleviates acute pain but without the nasty side effects and addictive qualities of opioid drugs. The company is also evaluating VX-548 in a pivotal clinical study targeting peripheral neuropathic pain.
Inaxaplin could be another huge winner. The experimental drug is advancing into late-stage testing in the first quarter of this year. Inaxaplin targets APOL1-mediated kidney disease (AMKD), a disease that affects more patients worldwide than CF. If approved, inaxaplin would be the only therapy on the market that treats the underlying cause of AMKD.
Those are the high-probability growth drivers for Vertex. The company also has promising pipeline programs that hold the potential to cure type 1 diabetes and treat myotonic dystrophy type 1 (DM1), a type of muscular dystrophy.
Eliminating the negatives
There's also a line in that old song that it's good to "e-lim-i-nate the negative." That's easy to do with Vertex as well.
For example, some of those skyrocketing AI stocks I referenced earlier now have nosebleed valuations. Vertex, on the other hand, still looks cheap when its growth prospects are factored in. Its price-to-earnings-to-growth (PEG) ratio is a low 0.58. Any PEG value below 1.0 is viewed as an attractive valuation.
Some of those other companies I initially considered also either already have significant competition or could have increased competition soon. What about Vertex? It has a virtual monopoly in treating CF with the closest rival years away at best from having a product on the market. Casgevy and VX-548 face competition but should still have tremendous growth opportunities. No other companies come close to Vertex's AMKD and type 1 diabetes programs.
Sure, there's a risk that experimental therapies in clinical trials can flop. However, Vertex's late-stage programs are largely de-risked, with phase 3 results already released for the vanzacaftor triple-drug combo for CF and VX-548.
"Don't mess with Mr. In-between"
The reality is that there are plenty of great growth stocks to buy with $1,000. You don't have to limit your choices to AI stocks and biotech stocks, either.
One other lyric from that song from long ago resonates with me, though: "Don't mess with Mr. In-between." Few stocks have as many positives as Vertex offers. Even fewer can eliminate the negatives as easily as Vertex can.
There's no such thing as a sure thing with investing. However, I think that buying Vertex Pharmaceuticals is as far from messing with "Mr. In-between" as you'll find.
