Many growth stocks have come under pressure in recent years as investor sentiment has shifted against the backdrop of the changing macroeconomic backdrop. While no one can predict what the market will do next, short-term market movements shouldn’t stop you from putting cash to work if you invest in quality companies for five, 10, or 15 years.
If you’re currently looking for top growth stocks to add to your portfolio, here are two names to consider for your buy list.
1. Vertex Pharmaceuticals
Vertex Pharmaceutica (NASDAQ: VRTX) has become a true giant over the past decade thanks to its leadership in the cystic fibrosis therapies market. The company has the distinction of being the only name in the industry with approved medications that treat the genetic cause of this disease. One of the pivots of Vertex’s business strategy is to focus on rare diseases or underserved areas of disease, for which there are minimal to no viable treatment options, and develop treatments that target the root cause of these conditions.
The most recent approval for Vertex was Casgevy, the product of a long-term collaboration with CRISPR therapies. Not only was Casgevy designed as a one-time functional cure for both sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), but it was also the first CRISPR therapy to be approved in history.
Because Casgevy is a gene editing therapy, administration is a lengthy and highly involved process. Patients should prepare for about two months to collect their blood stem cells. Once collected, processing the cells for reinfusion takes five to six months. The patient must then undergo chemotherapy before receiving Casgevy, after which there is a recovery period.
In addition to the timeline to administer Casgvey, the therapy’s $2.2 million price tag brings unique considerations for payers, so Vertex’s ability to execute robust reimbursement agreements with public and private payers will be critical . Vertex has been actively working with payers to achieve this goal. For example, in August the company announced that it had entered into a reimbursement agreement with England’s National Health Service for eligible TDT patients to receive Casgevy.
While it will take some time for the gene-editing therapy momentum to materialize, analysts believe Casgevy will rake in another $3 billion or more annually for Vertex in the future.
In addition to the recent developments at Casgevy, Vertex has become increasingly stronger in other areas. It is awaiting approval for a new triple combination therapy for cystic fibrosis that could be even more effective than its existing flagship therapy, Trikafta. The company is also working to obtain regulatory green light for suzetrigine, its non-opioid drug for moderate to severe acute pain. Suzetrigine is also being investigated as a treatment for diabetic peripheral neuropathy.
These are likely the two near-term launches, but Vertex is also developing a stem cell therapy designed to address the underlying cause of type 1 diabetes, and drugs that target the genetic causes of APOL1-mediated kidney disease (AMKD). ), myotonic dystrophy type 1 (DM1) and autosomal dominant polycystic kidney disease (ADPKD).
In the second quarter, Vertex reported product sales of $2.65 billion, up 6% from the same period last year. The company has historically been very profitable, but its recent acquisition of Alpine Immune Sciences (a biotechnology company developing novel protein-based cancer immunotherapies) sent its bottom line into the red over the past three months. That should be a short-term phenomenon.
This follows the first quarter of 2024, in which it reported revenue of $2.69 billion, up 13% from a year ago, while net profit rose 57% year over year to $1.1 billion.
It appears that Vertex is on a robust growth trajectory, built on a solid foundation from its existing leadership in cystic fibrosis, and that’s a growth story that healthcare investors would want to capitalize on sooner or later.
2. Palantir Technologies
Palantir Technologies (NYSE:PLTR) builds and leverages software platforms that enable government and commercial enterprises to assess, integrate, synthesize and streamline data.
The big data analytics company originally targeted members of the intelligence community, but has slowly but surely diversified its revenue streams into large public and private companies. Palantir’s customer base is diverse. It ranges from companies like United Airlines And Ferrari to the U.S. intelligence community and the Department of Defense. Its core products include Gotham, Foundry, Apollo and the Artificial Intelligence Platform (AIP).
Gotham has historically been used by members of the U.S. and international intelligence communities to centralize intelligence gathering and drive better decision-making in numerous use cases, whether planning missions, targeting enemies, or other military operations. Foundry helps enterprise customers manage and analyze data to transform workflow processes, while Apollo helps manage and operate software that controls Palantir’s various products in the cloud.
Palantir didn’t launch its AIP until 2023, but it has already experienced rapid adoption among government and commercial customers to apply AI-driven decision making in real time.
AIP has been a key driver of Palantir’s recent successes and looks increasingly integral to the company’s long-term growth story. Not only have new customers been attracted to AIP, but many of Palantir’s existing customers have also added AIP to their long-term agreements with the company. Chief Revenue Officer Ryan Taylor provided some notable examples of AIP’s success with existing customers during the Q2 earnings call:
Tampa General signed a seven-year expansion, using AIP to deliver a care coordination operating system, helping them reduce patient length of stay by 30%. Panasonic Energy of North America signed a three-year expansion using AIP for financial, quality control and manufacturing activities.
AARP shared that they use AIP to deliver targeted, personalized experiences to their 29 million unique visitors every month. Eaton have deepened our relationship and leveraged AIP to modernize ERP implementations, in addition to finance, sales and supply chain use cases. Kinder Morgan signed a five-year expansion of the Foundry and AIP business to include manufacturing use cases including storage optimization, pipeline integrity monitoring and energy optimization.
Palantir is now in the process of launching its latest product, called Warp Speed. Chief Technology Officer Shyam Sankar said Warp Speed ​​was designed “to drive American reindustrialization” and was seen as “an operating system for the modern American manufacturer.” Sankar said the new back-end platform is built on AIP with industrial AI and was developed from years of helping industrial customers build everything from cars to aircraft.
For the second quarter of 2024, the company generated $678 million in revenue, up 27% year over year. Government revenues totaled $371 million, while commercial revenues totaled $307 million. These figures were 23% and 33% higher respectively than a year ago. Palantir closed 27 deals worth more than $10 million in operating revenue in the three-month period alone, while customer numbers rose 41% from a year ago. Profits for the three-month period totaled $134 million, although Palantir posted a net profit of about $405 million in the last twelve months.
The stock is currently on a winning streak, but the long-term picture for this company looks even more attractive to investors.
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Rachel Warren has no positions in any of the stocks mentioned. The Motley Fool holds positions in and recommends CRISPR Therapeutics, Kinder Morgan, Palantir Technologies, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
Do you have $1,000? 2 Great Growth Stocks to Buy and Hold Forever was originally published by The Motley Fool
