Three pharmaceutical companies with solid foundations and potential for growth
Every investment portfolio needs stable supports - stocks that grow over the long term, regardless of market sentiment or the state of the economy. The pharmaceutical sector is therefore a great place to look for such stocks. Companies involved in the production of life-saving drugs and innovative medicines offer long-term growth and stability, making them an excellent choice for investors looking for a solid foundation for their portfolio.
In this article, we look at three pharmaceutical companies that not only have strong and stable core businesses, but also multiple avenues for growth in the future.
Abbott Laboratories $ABT: Diversity and stability
Abbott Laboratories is one of the most stable players in the pharmaceutical market due to its diversification. The company generates revenue not only from the sale of pharmaceuticals but also from diagnostics, medical nutrition, medical devices, and instruments such as cardiac stents. This broad scope makes it resilient to economic fluctuations, as its products are essential for the functioning of healthcare facilities regardless of the economic situation.
Over the past five years, its diluted earnings per share (EPS) has grown 66.4%, indicating strong growth. With the successful launch of new products such as the Freestyle Libre continuous glucose monitor, EPS is expected to grow further to $5.13 in the next fiscal year. Abbott also stands out as a Dividend King, meaning it has regularly increased its dividend for several decades. Thus, holding Abbott stock is not only stable, but also profitable over the long term.
AbbVie $ABBV: Strength in innovation and research
AbbVie, which was spun off from Abbott Labs in 2013, is another solid pillar of the pharmaceutical sector. While its primary focus is on developing new drugs, which carries higher risks, it also brings the potential for higher profits. The company expects to gain regulatory approval for at least five of its new programs in 2025, which could significantly boost its profitability.
The key drivers of this growth are the drugs Skyrizi and Rinvoq, which are expected to generate over $27 billion in revenue by 2027. AbbVie demonstrates the importance of continually expanding the capabilities of its existing drugs through further research and development, enabling steady returns for shareholders even with only a few new product launches.
Vertex Pharmaceuticals $VRTX: Market and Diversification Champion
Vertex Pharmaceuticals is a stable investment due to its market dominance and strategic diversification. The company is a leader in the treatment of cystic fibrosis (CF), where it is virtually unrivaled for its therapies targeting the causes of the disease. In addition, it is expanding into other areas, which increases its growth potential.
Over the past five years, Vertex's quarterly revenue has grown 178.5% and operating profit has grown 814%, impressive numbers. The company is focusing on incremental improvements to its already approved drugs and investing profits in new programs. Recent success with Casgeva's cell therapy for sickle cell anemia and beta-thalassemia shows that Vertex is ready for even the most innovative approaches.
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