Recently, the biotech industry has taken a bit of a slower stance toward growth. With the Covid-19 pandemic in the rearview mirror, the focus of major pharmaceutical developers and biotech companies shifted back toward chronic diseases like diabetes, cancer, and heart disease. And while these illnesses are certainly important to treat, particularly in the U.S., they don’t offer the same kind of dynamic growth that vaccine companies experienced at the height of the race to develop the vaccine for Covid.
Two years have passed since the height of the pandemic, and nearly no one is talking about vaccines as a primary driver of which biotech stocks to buy now. Instead, most investor focus has switched to the companies developing long-term treatments for recurring patients. Here are three such biotech stocks to buy now for diverse portfolio returns rooted in long-term stability.
AbbVie (ABBV)
Coming fresh off a Food and Drug Administration (FDA) approval, AbbVie (NYSE:ABBV) has seen relatively little action over the last quarter. Many investors have set aside the stock due to its slow growth, but its dividend yield of 3.6% and decent price-to-earnings ratio of 51x are respectable, to say the least. This is especially true when considering that 94.41% of biotech firms are money-losing operations.
Of particular note is ABBV’s recent FDA approval of its ulcerative colitis drug, Skyrizi. The drug’s active mechanism is through specific inhibition of the immune system’s Interleukin 23 (IL-23) molecule. This makes it capable of treating Crohn’s disease as well.
Considering that the Crohn’s and Colitis Foundation recently furnished a study that found that one in 100 Americans suffer from irritable bowel diseases, AbbVie’s prospects for selling the drug are high. Thus, ABBV stock is likely one of the best biotech stocks to buy now.
Novo Nordisk (NVO)
With the sheer success of its weight loss and diabetes drugs, Novo Nordisk (NYSE:NVO) stands poised for expansion. The Danish biotech giant plans to expand its presence in North Carolina with an $11 million manufacturing expansion to meet demand for its drugs. That bodes incredibly well for investors as it signals revenue growth in the coming quarters, which will likely keep NVO stock on the uptrend.
This is all part of a broader financial success plan that NVO has been implementing, which resulted in a 22.4% increase in revenue in the first quarter. This contributed to a healthy net income increase for the quarter of 28.2%. As NVO’s cash reserves mount, so too will its ability to expand its drug manufacturing as an obesity epidemic ravages the U.S.
Eli Lilly (LLY)
Eli Lilly’s (NYSE:LLY) story is very similar to NVO’s as its revenues maintain year-over-year growth. Just like NVO, this success results from its diabetes and weight loss drugs: Mounjaro and Zepbound. Compounding this success, LLY’s new Alzheimer’s drug, Donanemab, recently gained FDA approval, marking yet another critical market to which LLY will have access.
Considering the effects of Alzheimer’s and the fact that an estimated 6.9 million Americans are living with Alzheimer’s dementia, LLY’s drug could be revolutionary both for the company and the people it treats. While we’ll have to wait and see where this new drug will take LLY stock, it’s likely to keep its value growing alongside the current weight loss portfolio.
This factor, in particular, makes LLY such an attractive proposition. Its portfolio of drugs is tailored to the diseases that plague Americans the most, making it ever more emotionally linked to the average person and that much more important to the broader stock market.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
