Apple (AAPL 0.36%) and Eli Lilly (LLY 8.24%) have faced significant volatility this year. However, both companies have benefited from recent positive developments, and their shares surged over the past month or so.
Here's some even better news for investors: There could be plenty of upside left for these market leaders. Apple and Eli Lilly are top picks for both growth-oriented and income-seeking investors.
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1. Apple
Apple has faced several issues this year. First, while its tech peers are benefiting from their work in artificial intelligence (AI), the iPhone maker's initiatives in this field haven't been as impressive as some would have liked, and definitely not on par with those of its similarly-sized competitors. Second, heavy tariffs on imported goods -- especially from China, where Apple manufactures a significant portion of its products -- could erode its margins and bottom line.
Even so, Apple rebounded over the past few months, partly thanks to efforts to appease the Trump administration and avoid extremely punitive tariffs. More recently, during its latest event, the company announced its lineup of new products. There was nothing groundbreaking related to AI, but some analysts believe Apple's new iPhone 17 line could once again kick-start a strong renewal cycle.
Given all that's happening, the stock has risen by 17% over the past six months, and I think it remains attractive for long-term investors.
Apple's most recent results, for the third quarter of its fiscal year 2025 (ended June 28), were strong and continued to show momentum in a key category: active devices. Revenue increased 10% year over year to $94 billion, earnings per share rose 12% to $1.57 compared to the year-ago period, and active devices reached new all-time highs across all categories.
With more than 2 billion devices in circulation -- and more than 1 billion paid subscriptions -- Apple's services segment is slowly but surely growing. The segment's juicier margins will, in the long run, help the company significantly improve its bottom line, provided it maintains or grows its installed base. Apple's recent quarterly update, along with expectations for the newest iPhones and other devices, demonstrates that it's capable of doing so.
Lastly, the stock is a terrific pick for dividend seekers. True, it has an unimpressive forward yield of around 0.4%. However, Apple generates a substantial amount of free cash flow, has increased its dividends by 100% over the past decade, and boasts a highly conservative payout ratio of 16%, which leaves ample room for further dividend increases. Apple can still deliver market-beating returns over the long run while consistently growing its dividend.
2. Eli Lilly
Eli Lilly's shares dropped Aug. 7 after it reported mixed phase 3 results for its investigational oral GLP-1 candidate, orforglipron. The medicine induced a mean weight loss of 12.4% in overweight or obese (but not diabetic) patients over 72 weeks. Wall Street was hoping for better weight-loss numbers, and lower rates of clinical-trial dropouts due to adverse reactions. However, following that debacle, the company has performed well: The stock is up 15% since.
One reason Lilly is rebounding is that it reported data from another phase 3 study for orforglipron, this time in overweight or obese and diabetic patients. The medicine's weight loss numbers and A1C reductions in this study were significant, positioning it for regulatory submissions. The therapy also proved more effective than Novo Nordisk's oral GLP-1 drug, Rybelsus, in a head-to-head study.
Eli Lilly is already a dominant player in the weight loss market. The approval of orforglipron -- likely by early 2027 at the latest -- should cement the company's status in the field.
In the meantime, expect to see further pipeline progress for the drugmaker. Its candidate retatrutide looks perhaps even more promising than its current crown jewel, Zepbound. Retatrutide induced weight loss of up to 24.2% in 48 weeks at the highest dose in a phase 2 study, with weight still falling afterwards, while Zepbound had a mean weight loss of up to 22.5% after 72 weeks. Retatrutide still needs to complete phase 3 results, but things are looking promising.
With these upcoming new launches, Lilly should maintain strong sales and earnings growth for the foreseeable future. The drugmaker's second-quarter revenue was up 38% year over year to $15.6 billion, an outstanding performance for a pharmaceutical company of this size.
Lastly, there's the dividend, which has increased by 200% in the past decade. The company's payout ratio of about 44% looks reasonable. The forward yield is a modest 0.8%, but Eli Lilly's strong underlying business and willingness to grow its payouts more than compensate for that.
