It’s easy to miss the forest for the trees in markets like this. Especially when it comes to pharmaceutical stocks.
What I mean is that, in some sectors, there are great stocks that get overlooked because a few of them are working on event-driven issues, while others are creating long-term solutions to major trends.
This is especially true in the pharmaceutical and biotech spaces right now. Maybe it’s because the Kentucky Derby was postponed, but people are betting on pharmas discovering a vaccine to Covid-19 like it’s the only horse race out there.
The fact is, there’s a whole racing season and betting on one horse in one race isn’t successful investing. And neither is betting on pharmaceutical stocks for one medicine.
That’s where my grading system comes in.
My algorithmic system of analysis has led to several market breakthroughs — from Adobe (NASDAQ:ABDE) and Qualcomm (NASDAQ:QCOM) to Nike (NYSE:NKE) and Home Depot (NYSE:HD) — allowing me to become a multibillionaire by the time I was in my 30s. Now, I’m looking to build even more profits through my Master Key investments.
Overall, there are plenty of massively successful drugs. However, they’re blockbusters because they can be used for a variety ailments. Or, the top companies have a strong pipeline of drugs that address issues that are important to a large number of people.
The seven best pharmaceutical stocks beyond the Covid-19 chase are great firms that will score big wins for many years to come. They are:
- United Therapeutics (NASDAQ:UTHR)
- Novo Nordisk (NYSE:NVO)
- Dr Reddy’s Laboratories (NYSE:RDY)
- AbbVie (NYSE:ABBV)
- Eli Lilly & Co (NYSE:LLY)
- Zoetis (NYSE:ZTS)
- Horizon Therapeutics (NASDAQ:HZNP)
Let’s look at what makes each worth your consideration.
The Best Pharmaceutical Stocks: United Therapeutics (UTHR)
Established in 1996 near the National Institutes of Health in the DC metro area, this biotech has an extensive library of drugs and devices to treat pulmonary hypertension (PH).
It has one device in the market currently, Remunity, a subcutaneous pump that allows patients with PH to stay mobile and active. It is also waiting for Food and Drug Administration clearance for another device, Trevyent.
This is a relatively rare disease, but doctors in the West are seeing cases grow in women by 2.5% annually.
UTHR also has a robust program for growing organs — lungs, kidneys, heart — and has a number of drugs in trials for PH-related diseases as well as brain cancer.
Many of these devices and drugs will have other uses for patients that have challenges from related pulmonary challenges.
UTHR stock is up 53% in the past 12 months but still trades at a price-to-earnings ratio under 10.
Novo Nordisk (NVO)
More than 30 years ago, NVO became the world’s leading insulin producer. Given how quickly diabetes has grown since then, it’s no surprise that NVO is now one of the leading pharmas in the treatment of Type 1 and Type 2 diabetes.
With a market cap of $154 billion, this Denmark-based drug company is a force to be reckoned with. And its influence in the industry remains significant.
It also focuses on obesity, as well as biopharmaceuticals for hormone replacement therapy, growth hormone therapy and hemophilia. These aren’t sexy spaces, but they are enormous and NVO is a well-established player.
You could say it’s more like Ted Williams than Babe Ruth. It’s not looking for home runs as much as it is solid, reliable base hits. And that is always good to have in your portfolio. In fact, you can find some of those through my Master Key investing model.
The stock is up 38% in the past year, yields 1.3% and is trading at a P/E that is about average for the S&P 500.
Dr Reddy’s Laboratories (RDY)
In 1984, Dr. Kallam Anji Reddy launched his generic pharmaceutical company with the goal of providing medicines that all Indians could afford.
Today, his generic-drugs-driving company is providing the world with affordable medicine.
Bear in mind, it’s not a major powerhouse, with only an $8 billion market cap, but it is a global player. And that market cap is based off real revenue, not hopeful drug trials.
Given its Asian roots, it doesn’t get a lot of play in the U.S., but that can be an advantage, since it keeps away a lot of the dumb money that FOMO investors pass around in markets like the one we’re in.
RDY has a portfolio of generics, over-the-counter medicines as well as its own oncology and inflammation drugs and has built a strong global business.
The stock is up 36% in the past 12 months and has a dividend that’s slightly better than a long-term CD.
More than half of Abbvie’s revenue every year comes from its blockbuster drug Humira. It has made nearly $20 billion annually in the past 2 years. It also has Imbruvica, which made $4 billion last year and Mavyret that made nearly $3 billion.
The point is this company is a well-established pharma powerhouse. But it’s also one of the best pharmaceutical stocks to consider today.
Its $172 billion market cap puts it in the top echelon of big pharma firms.
The crazy thing is, after running up 40% in the past 12 months, it still yields 4.8% and it’s trading at a P/E far below market averages.
Sometimes, even in crazy markets like this one, you can find some real values in big, sturdy companies that have significant growth potential. That said, growth — like these pharmaceutical plays, is where I really shine. And you can truly see that through my Master Key investing model.
Eli Lilly & Co (LLY)
The history of LLY goes back to 1876. It was the drug company that first made and distributed the Jonas Salk’s polio vaccine. It was a pioneer in developing insulin medications, and remains a key insulin drug maker.
It also has a long list of widely prescribed psychological medications like Prozac, Cymbalta and Zyprexa.
LLY has staid a market leader by maintaining a number of strong portfolios in broad treatment areas. It has winners, but it’s the cumulative power of its portfolio that’s most important.
In 2019, Trulicity was its biggest drug at $4 billion in sales, followed by Humalog, which had sales near $3 billion. Overall revenue in 2019 was around $22 billion, so its top two drugs only made up 33% of its revenue base.
LLY stock is up 53% in the past 12 months and still has a 1.8% dividend. It’s getting pricey but its growth is still far outpacing its valuation, which makes it one of the stand out pharmaceutical stocks today.
With all the talk about potential vaccines and cures for Covid-19, many people have forgotten about the virus that was running rampant as late as last fall.
It wasn’t human, but it was decimating the population of pigs around the world, especially in China. It’s called the African Swine Flu (ASF) and it halved the pork production in China in a matter of months.
China is largest consumer of pork, so that’s a very big deal. It had huge impacts on the economy. And large U.S. producers were under stress because some of the largest are now Chinese subsidiaries.
ZTS in an animal health firm. And it was already developing a vaccine for ASF just as the epidemic — ASF that is — began to break.
It’s also getting notoriety now because more people understand the link between animal viruses and people. And a company like ZTS is on the front lines and can be very helpful in helping both animals and humans. Their technology is at the forefront of animal healthcare, and you can find similar companies that hold the secret to unlocking massive gains in high-growth industries here.
ZTS stock is up 20% in the past year and has a $65 billion market cap, so it’s a major player in its sector.
Horizon Therapeutics (HZNP)
This Ireland-based firm has a handful of drugs that are in the market. It specializes in the rare disease and rheumatoid markets, with drugs ranging from treating gout to fibrotic thyroid eye disease.
The stock has taken off this year because two if its recent releases look like they could be blockbusters — Krystexxa and Tepezza. The former is a new treatment for gout. The latter is the only FDA-approved Thyroid Eye Disease treatment.
While it has a number of treatments for osteo and rheumatoid arthritis as well, there’s a lot of competition for these medicines. But the coast is clear for Krystexxa and Tepezza.
HZNP is up 143% in the past 12 months, and 84% since its Q1 numbers came out 3 months ago.
With an $11 billion market cap, it’s also a tempting target for larger drug companies looking to add to their portfolios in these areas. All of these aspects combine to make it one of the best pharmaceutical stocks to consider now.
Find Your ‘Master Key’ to Investing
Businesses like Intel (NASDAQ:INTC), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) are obviously monsters when it comes to Wall Street. However, at InvestorPlace, they’re what our network of financial insiders refer to as “Master Key” investments.
What is a Master Key investment?
Well, in a literal sense, a master key is a single key that can be used to unlock any door in a building — even though each door has its own individual key. In turn, whoever holds this master key has the power to unlock any door.
And that’s exactly the kind of investment opportunity we look for.
These Master Key investments are by far the best and most lucrative you can make. But, that’s only if you get in on them early.
That said, click here to see how I found these stocks and unlock the door to a more profitable portfolio.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.