If you've paid any attention whatsoever to the discussion surrounding the stock market over the last few months, you've doubtlessly encountered a lot of chatter about the "Magnificent Seven" tech stocks -- you know, the supposedly invincible group of companies featuring the likes of Nvidia, Microsoft, and Apple.
But with the Seven's valuations soaring, it's completely reasonable for investors to be looking for something with a more enduring appeal, or for something outside of the tech sector.
Thankfully, there's no shortage of great options, so let's discuss a trio of Magnificent Seven alternatives that beat the market over the last 12 months and that have the staying power and growth potential to be in your portfolio forever.
NASDAQ: VRTX
Key Data Points
1. Vertex Pharmaceuticals
It might be surprising to hear that a rare disease drug developer like Vertex Pharmaceuticals (VRTX 0.59%) could hold a candle to anything in the Magnificent Seven, but the data don't lie; its shares rose by 33% in the last year, whereas Apple's only rose by 9%.
Driving its success is the launch of its latest medicine, a gene therapy called Casgevy which treats both beta thalassemia as well as sickle cell disease. Management thinks that sales of Casgevy could help to push the company's top line for this year up to nearly $10.8 billion.
As recently as 2019, it only brought in revenue of $4.2 billion, derived entirely from the sale of its portfolio of drugs for cystic fibrosis, and it's been profitable all the while. So there is ample reason to believe that the good times will keep rolling.
The company will soon likely have the opportunity to commercialize two more medicines. Its program for treating acute pain recently successfully concluded its phase 3 clinical trials, and now Vertex will petition regulators for the drug's approval before the midpoint of 2024. It's also going to be doing the same process with roughly the same time line for another cystic fibrosis therapy.
The approvals aren't a sure thing, but the odds look good. So consider buying this stock to take advantage of its upcoming top-line growth. If you do end up buying it, you may find that it adds value to your portfolio for years and years.
NYSE: LLY
Key Data Points
2. Eli Lilly
Eli Lilly's (LLY 1.85%) stock is difficult to beat in biopharma right now, rising 335% in the last three years alone.
The story of the stock's recent success is inseparable from its participation in the market for therapies that treat metabolic conditions like type 2 diabetes and obesity. Presently, the company's medicine Zepbound for weight loss and Mounjaro for diabetes have a good shot at being the leaders of their markets due to their high efficacy and increasingly wide availability.
In the fourth quarter alone, Mounjaro sales topped $2.2 billion; management is banking on a total revenue of up to $41.6 billion in 2024, but that could just be the start of its ramping up. Zepbound hasn't even been on the market for a full year yet, and demand is so hot that Eli Lilly can't manufacture the drug fast enough.
And that makes Eli Lilly a magnificent pick, even if it isn't formally a member of the Seven.
NASDAQ: COST
Key Data Points
3. Costco Wholesale
Costco Wholesale (COST +1.02%) might seem like it isn't dynamic enough to be a stock that's worth owning instead of one of the Magnificent Seven. But that perception couldn't be further from the truth. Its shares have risen by 117% over the last three years alone as a result of the company's dutiful execution on its time-tested business model.
The investing thesis for Costco is incredibly simple. Because it charges people an annual-membership fee to access its warehouses, where they can buy a vast number of different groceries and other consumer goods in bulk at dirt-cheap prices, all it needs to do to stay in business is to keep its members happy.
In the last 12 months, its membership fees totaled $4.7 billion, and close to 93% of those members renewed from the prior year. What's more, it grew its subscriber base by nearly 2% in 2023 as well as in 2022.
Given that its membership fees constitute the majority of its net income, which totaled more than $1.7 billion in Q2 alone, it can sell its products at razor-thin margins and still easily come out ahead. And until there's reason to believe that Costco is letting its customers down, the evidence indicates that it'll continue to be a great investment.
