The laws of physics apply in some ways to investing. For example, some stocks have inertia -- they just can't break out of their rut. Others, though, either have momentum or the likelihood of gaining it in the future. Those are the kinds of stocks that are hard to keep down.
Three Motley Fool contributors have thoughts on which unstoppable stocks are great picks to buy right now. Here's why they chose AbbVie (ABBV 0.23%), Pfizer (PFE -2.04%), and Vertex Pharmaceuticals (VRTX 0.04%).
Multiple blockbusters to build its business around
David Jagielski (AbbVie): This year will undoubtedly be a tough one for AbbVie. Sales for its top-selling rheumatoid arthritis drug Humira will decline by as much as 37%, according to the company's own estimates. That's especially concerning considering the drug's sales topped $21 billion in 2022.
But the business's long-term trajectory remains solid because AbbVie has a plan. Immunology drugs Skyrizi and Rinvoq, for instance, should make up for the decline in Humira's sales and their combined sales could reach a higher peak.
The company also has many other promising products in its pipeline, including migraine medication Qulipta. In a recent phase 3 trial, the drug was effective in decreasing the number of mean monthly migraine days in adult patients by 4.2 days (versus 1.85 for the placebo). At its peak, Qulipta could be a blockbuster, bringing in more than $1 billion in annual revenue.
Ubrelvy is another migraine medication that could generate a similar amount in sales. Then there's schizophrenia and depression drug Vraylar, which may hit a peak of $4 billion in revenue; it already generated $2 billion last year.
AbbVie is a growth-oriented business that isn't slowing down. The company still has more than 50 programs in its pipeline. And with the business generating at least $22 billion in free cash flow in each of the past two years, it has plenty of resources at its disposal to invest in its pipeline.
While the stock hasn't performed well so far this year, investors should consider loading up on it for the long haul. This appears to be an underrated growth stock to buy right now.
More than meets the eye
Keith Speights (Pfizer): Pfizer's shares have plummeted close to 25% so far this year. Sales for its COVID-19 vaccine, Comirnaty, and antiviral therapy, Paxlovid, are sinking. Some might think that Pfizer is past its prime.
But there's more than meets the eye to this big drugmaker. Pfizer's long-term prospects should be much better than its current situation implies.
For one thing, the story is far from over for Comirnaty and Paxlovid. Pfizer anticipates that sales for both products will rebound after a trough year in 2023. The company even thinks that by 2026 a combination COVID-19/flu vaccine could generate higher sales than Paxlovid did last year.
New product launches through the first half of 2024 that have no connection with COVID should generate revenue growth in the ballpark of $20 billion, based on Pfizer's projections. This should more than offset any sales declines resulting from existing products losing exclusivity.
One new product likely on the way especially stands out: Pfizer's respiratory syncytial virus (RSV) vaccine, PF-06928316. This vaccine could be a big winner in the $10 billion RSV market.
Pfizer also looks for a big revenue boost from its business development deals. The company has already completed several key transactions, including its purchases of Arena and Biohaven. It awaits regulatory approvals to acquire Seagen, which could add more than $10 billion in risk-adjusted revenue in 2030.
This stock currently trades at only around 12 times forward earnings. It offers a dividend yield of nearly 4.3%. Pfizer might not appear to be unstoppable, but I think it could be for long-term investors.
This company boasts incredible potential
Prosper Junior Bakiny (Vertex Pharmaceuticals): Vertex Pharmaceuticals has been nearly unstoppable for the better part of the last decade, a period during which its returns dwarf that of the S&P 500. That's excellent news for the company's shareholders, but there is even better news for investors who have yet to initiate a position: Vertex Pharmaceuticals isn't done delivering these kinds of returns.
The company's greatest strength is its focus on developing medicines for illnesses for which few safe and effective treatment options exist. It achieved tremendous success in the cystic fibrosis (CF) market, where it holds a monopoly on the market for medicines that address the underlying causes of the disease. Its pipeline features promising programs targeting type 1 diabetes (T1D), acute and neuropathic pain, sickle cell disease (SCD), and transfusion-dependent beta-thalassemia (TDT) -- two blood-related disorders -- among other targets.
Vertex isn't just trying to develop run-of-the-mill therapies for these conditions. In TDT and SCD, its exa-cel, codeveloped with CRISPR Therapeutics, could be a one-time curative treatment. The company's potential T1D medicines could restore patients' ability to make their own insulin.
There's no guarantee all of these programs will succeed. As have most biotechs, Vertex Pharmaceuticals has tasted failure in clinical studies before. But at least some of its programs will likely be successful.
Further, Vertex Pharmaceuticals' free cash flow has been on an upward trend for a while; it currently stands at about $4 billion. The company has the funds to acquire the rights to new promising programs, which is what it did with what it expects to be its next launch, exa-cel. This medicine is looking at annual sales potential above $5 billion.
Vertex's lineup of CF therapies and its diversified pipeline should allow it to continue doing what it did over the past decade: Beat the market.
