October sometimes gets a bad rap from investors. Sure, there have been several major stock market crashes in the past month. However, October has historically been a pretty good month for stocks.
Three Fool.com contributors have highlighted what they think are no-brainer growth stocks to buy in October. This is why they chose Eli Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO)And Vertex Pharmaceutica (NASDAQ: VRTX).
An abundance of growth opportunities
Prosper Junior Bakiny (Eli Lilly): Over the past two years, the Eli Lilly brand has become nearly synonymous with the weight loss market, and for good reason. The company is one of the leaders in this fast-growing field thanks to Zepbound, a drug whose sales are increasing at an almost frightening pace.
While Eli Lilly’s anti-obesity drugs may be the main growth drivers for the foreseeable future, the company has an extensive offering and a pipeline full of other products that will meaningfully contribute to the company’s performance.
Recently, Eli Lilly received approval for Kisunla, a therapy for Alzheimer’s disease. The AD market is known as the graveyard of drug development: the vast majority of attempts to develop new drugs in this area have failed over the past two decades. Eli Lilly has succeeded, and given the unmet need in AD, Kisunla will be an important product for the company.
Other newer drugs in Eli Lilly’s portfolio include the cancer drug Jaypirca and an ulcerative colitis treatment called Omvoh. Both were approved last year.
Going back further, even some of Eli Lilly’s older drugs are still seeing significant sales growth. That includes the immunosuppressant Taltz, the cancer drug Verzenio and the diabetes drug Jardiance. That’s to say nothing of Eli Lilly’s pipeline, which includes exciting programs in diabetes, obesity, various immunological disorders, rare diseases and more.
Eli Lilly has many weapons in its arsenal and the company continues to deliver excellent financial results. This is definitely a no-brainer stock to invest in this month, even though shares have soared in recent years. Fortunately, there is still plenty of upside potential.
An unstoppable growth stock on sale
David Jagielski (Novo Nordisk): One of the best growth stocks to buy this month is Novo Nordisk. Shares have fallen more than 15% in the past three months and are now trading around February levels. If you’re a long-term investor, this could be a no-brainer purchase right now.
Novo Nordisk is a major player in the growing anti-obesity market. While consumers and investors may be most familiar with Ozempic, the diabetes drug people use off-label to lose weight, Wegovy could be the company’s golden goose.
Wegovy is approved for weight loss and Novo Nordisk is still in the early stages of its international rollout. And its uses can be much broader than just weight loss applications. The Food and Drug Administration (FDA) has also approved Wegovy as a treatment to reduce cardiovascular risk in obese and overweight adults. Because it is more than just a weight loss drug, this increases the likelihood that health insurers will provide coverage for Wegovy, and that it can reach a larger number of people.
Currently, Wegovy is not Novo Nordisk’s best-selling drug, but it is the company’s fastest-growing product. During the first half of the year, Wegovy grew by 74% (Ozempic is still growing, but at a slower pace of 36%), with sales totaling 21 billion Danish kroner ($3.1 billion). Ozempic has generated almost three times as much revenue, but investors should not underestimate Wegovy’s potential as it could become the pharmaceutical company’s bestseller in the future.
As a result of the share price drop, Novo Nordisk shares trade at 29 times estimated future earnings (based on analyst expectations). That is slightly lower than the average in the past. And with so much potential still ahead for Novo Nordisk, it could be an excellent growth stock to buy today.
A monster in the making
Keith Speights (Vertex Pharmaceuticals): Don’t be fooled by Vertex Pharmaceuticals’ second-quarter results. To be sure, the major biotech company generated just 6% year-over-year revenue growth. The main thing we need to focus on with Vertex is what’s coming next.
We can start with Casgevy. Although Vertex received FDA approval in December 2023 for its gene-editing therapy for sickle cell disease and in January 2024 for transfusion-dependent beta-thalassemia, its launch is still in its infancy. Look for Casgevy sales to start picking up next year.
Vertex is awaiting FDA approval for two other drugs. The triple combination of vanzacaftor for the treatment of cystic fibrosis (CF) has a PDUFA date of January 2, 2025. The FDA has set a PDUFA date of January 30, 2025 for an approval decision on its non-opioid drug suzetrigine for the relief of disease. moderate to severe acute pain.
Looking a little further, Vertex’s pipeline includes two other late-stage drugs that could be huge winners. Inaxaplin targets APOL1-mediated kidney disease (AMKD), while povetacicipet targets another kidney disease called IgA nephropathy. Both indications affect more patients than CF.
I’m looking at several early-stage Vertex programs, but none closer than VX-880 and VX-264. These islet cell therapies have the potential to achieve this healing type 1 diabetes. There is still a long way to go, but Vertex is cautiously optimistic that these programs are on the right track.
Each drug I’ve mentioned could, in my opinion, ultimately generate peak annual sales of $1 billion or more (and in some cases significantly more). Vertex is already big, with a market cap of over $120 billion. I think it will get much bigger over the next decade, and this biotech stock could realistically be a monster in the making.
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David Jagielski has no position in the stocks mentioned. Keith Speights holds positions at Vertex Pharmaceuticals. Prosper Junior Bakiny holds positions at Vertex Pharmaceuticals. The Motley Fool holds and recommends Vertex Pharmaceuticals. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
3 No-Brainer Growth Stocks to Buy in October was originally published by The Motley Fool
