Equity markets may be struggling because of President Donald Trump's current economic policies, but that doesn't mean investors should avoid buying stocks right now -- quite the contrary. History tells us that equities tend to experience strong runs following downturns, so it's worth putting money into excellent companies that are being dragged down with along with the broader market.
To that end, let's consider five excellent growth-oriented companies to invest in on the dip: Novo Nordisk (NVO +0.24%), Eli Lilly (LLY 0.21%), Vertex Pharmaceuticals (VRTX 1.42%), Intuitive Surgical (ISRG +1.47%), and Shopify (SHOP +0.15%).
NYSE: NVO
Key Data Points
Novo Nordisk and Eli Lilly
It might seem odd to group Eli Lilly and Novo Nordisk, but these drugmakers have much in common. They've been the leaders in the diabetes drug market for decades, and both are now pioneering the obesity management space. Novo Nordisk was first to market with Wegovy, an anti-obesity medicine that has become a household name. Eli Lilly then made its move with Zepbound, whose sales are growing incredibly rapidly.
Both companies also have exciting candidates in the pipeline in diabetes and obesity care. Eli Lilly should release data from phase 3 clinical trials for orforglipron, a once-daily oral pill for weight management, sometime this year. Novo Nordisk failed to impress the market with late-stage clinical trial data for CagriSema, an anti-obesity candidate, but it has more potential gems in its pipeline.
NYSE: LLY
Key Data Points
Novo Nordisk and Eli Lilly have both seen sales grow rapidly in recent years thanks to their dominance in weight management. And although some observers were worried about their valuations, the current sell-off should take care of that problem.
There are some key differences between these two leading drugmakers. Novo Nordisk is more focused on diabetes than its counterpart; as of November, it held a 33.7% share of the diabetes care market -- remaining flat year over year. Eli Lilly has blockbusters in other areas, such as immunology and oncology.
In the long run, expect somewhat more of the same, though Novo Nordisk should succeed in diversifying its operations. The crucial point is that both companies are innovative drugmakers with deep lineups, pipelines, and significant growth prospects. Now that they've become cheaper in the sell-off, it's a great time to buy.
NASDAQ: VRTX
Key Data Points
Vertex Pharmaceuticals
Vertex Pharmaceuticals is another leading drugmaker that famously dominates its market: medicines for cystic fibrosis (CF), a disease that affects internal organs. Vertex develops the only therapies in the world that target the underlying causes of this condition.
The company generates steady revenue and profits. Though it's made tremendous headway in treating CF patients since the early 2010s, there remain many who have yet to start treatment, even among those who are eligible for its current drugs.
Elsewhere, the biotech has expanded its lineup thanks to therapies like Casgevy, which treats a pair of blood-related disorders, and Journavx, a non-opioid pain medication; both should be significant growth drivers. And that's before we look into the pipeline, which boasts several promising candidates.
Vertex Pharmaceuticals' prospects remain attractive, making it a top stock to buy in this downturn.
Intuitive Surgical
Intuitive Surgical is a medical device specialist that dominates the robotic-assisted surgery (RAS) market. The company's crown jewel is the da Vinci system, which is approved for many procedures across multiple areas. The most recent iteration of this device -- the fifth -- is an improvement over previous versions. Though it only received clearance last year, it has already attracted quite a bit of attention, more than analysts expected.
This shows, once again, Intuitive's commitment to innovation. So, despite the threat of competition from healthcare giants like Medtronic and Johnson & Johnson -- both of which are working on RAS devices -- Intuitive Surgical's long-term prospects look attractive. Besides its innovative abilities, Intuitive benefits from a first-mover advantage: It will take years before newcomers jump through all the clinical and regulatory hoops needed to challenge the company's dominance.
Meanwhile, the RAS market remains underpenetrated, with fewer than 5% of eligible procedures being performed robotically. Expect Intuitive to grow its installed base and procedure volume at a good clip in the long run, along with its revenue and earnings. The stock can still provide outsized returns.
Shopify
E-commerce specialist Shopify started the year on a strong note. Its financial results have been strong lately, particularly on the bottom line, where relatively recent changes (getting rid of its logistics business and increasing its prices) are helping boost profits. However, the company has not escaped the market downturn. Still, considering Shopify's position in the e-commerce field -- and the industry's prospects -- this is an excellent opportunity to pick up some shares.
Shopify gives merchants everything they need to start and run an online storefront, with thousands of apps in its app store that cater to merchants' demands beyond the company's basic offerings. It also holds a 12% market share in the U.S. by gross merchandise volume -- that's up from 10% in 2022. And it benefits from a strong competitive advantage based on switching costs.
Meanwhile, e-commerce still accounts for under 20% of total retail commerce in the U.S., one of the world's leaders in the industry. Shopify could ride the increased growth of this market for years and deliver strong returns to loyal, patient shareholders. That's why the stock is worth buying on the dip.
