Many stocks have been enjoying major gains as the bull market has persisted, driving up shares prices of companies across various indexes. If you're investing for the long term, what's more important is how a stock can perform over the long run versus a period of weeks or months.
While past performance isn't a guarantee of future returns, investing your cash into great companies well-positioned for long-term growth is always a good idea. If you have cash on hand this summer and want to put it into quality companies that can soar in the coming months and years, here are two worthy contenders to consider for your portfolio.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ: VRTX) is known for its leadership in the field of cystic fibrosis therapeutics but is working to expand beyond this area and further cement its place in the rare-disease drug market. The company's flagship cystic fibrosis therapy Trikafta is approved to treat more than 90% of the U.S. patient population alone. Expanded approvals for Trikafta and Vertex's other cystic fibrosis drugs have helped the company to expand the cycle of use for patients, deepening its foothold in this broad total-addressable market.
The company has a new triple-combination cystic fibrosis therapy for which it's seeking regulatory approval. Among numerous benefits, it only needs to be taken once a day instead of twice a day, like Vertex's current lineup of medicines.
The triple-combination therapy has been granted priority review by the U.S. Food and Drug Administration (FDA), and Vertex is seeking approval for eligible cystic fibrosis patients aged six and older. Management also estimates that as many as 6,000 patients who have discontinued the company's existing cystic fibrosis therapies may be eligible to take this new triple-combination drug.
Vertex's launch of CRISPR therapy Casgevy is in full swing. The gene editing therapy is designed to be a one-time functional cure for patients with sickle cell disease, as well as transfusion-dependent beta-thalassemia, a condition that impairs the ability of red blood cells to carry oxygen. In the recent earnings call, management affirmed that Casgevy's existing approvals face a total addressable market of 35,000 individuals in the U.S. and Europe, along with around 23,000 patients in Bahrain and Saudi Arabia.
The company's acute pain candidate suzetrigine is awaiting the regulatory green light from the FDA,and has also been granted priority review by the agency. The total addressable market for this product, which is not an opioid, could be upward of 90 million patients in the U.S. alone.
Vertex is working on numerous functional cures for various diseases that are either underserved and/or have extensive, fragmented addressable markets. Take its stem cell therapy VX-880, for example, which is being tested as a functional cure for type 1 diabetes.
At a presentation for the American Diabetes Association in June, Vertex Pharmaceuticals reported that VX-880 showed significant promise in an ongoing phase 1/2 study. The presentation focused on 12 patients from the study who had received a full dose via a single infusion of the therapy and had at least three months of follow up.
From this group, 11 of 12 patients significantly reduced or eliminated exogenous insulin use, all 12 patients had time in range for glucose levels of 70% or more, and all 12 patients reached hemoglobin A1c levels less than 7%. Three of these patients received 12 months of follow-up, and all three of these individuals met the primary endpoint of eliminating severe hypoglycemic events with a hemoglobin-A1C level below 7 -- the secondary endpoint of insulin independence. The next development phase for VX-880 is in progress.
From a financial perspective, Vertex is profitable and revenue is steadily rising. The 2024 second quarter was a rare exception, when it reported a net loss because of a one-time nondeductible $4.4 billion research and development charge related to its acquisition of Alpine Immune Sciences.
Revenue rose 6% year over year in the second quarter of 2024 to $2.65 billion. Vertex also finished the quarter with more than $10 billion of cash and investments on its balance sheet, despite having used about $5 billion in cash to fund its Alpine acquisition. Overall, this is a healthcare business in solid shape that seems to have a superior growth opportunity again, and investors might want to consider an investment sooner rather than later.
2. Amazon
Amazon (NASDAQ: AMZN) has demonstrated its resilience through many types of stock markets and economic landscapes. Looking at the second quarter of 2024, the company reported $148 billion in net sales, a nice 10% bump from the prior-year's quarter. Of that total, sales were a healthy split between about $62 billion in product sales and $86 billion in services sales. Net income totaled $13.5 billion, about double the 2023 second-quarter profit.
Amazon's flagship e-commerce platform and Amazon Web Services (AWS) continue to be the most notable needle movers for the company's financial growth. However, other areas, like subscription services and advertising, are growing steadily, too.
Case in point: Amazon brought in $55.4 billion in net sales from online stores and about $36.2 billion from third-party seller services in the latest quarter. Those figures represented increases of 5% and 12%, respectively, from the second quarter of 2023.
AWS accounted for $26.3 billion of net revenue, with that figure representing a 19% growth rate from one year ago.
Advertising sales were the next largest revenue driver and totaled $12.8 billion, up 20% year over year. Subscription services, like Prime, raked in net sales of $10.9 billion, a 10% increase from a year ago.
From a profitability perspective, AWS is the leading driver. Of Amazon's total operating income of $14.7 billion in the latest quarter, $9.3 billion was attributable to AWS.
The company continues to expand its pharmacy division. One recent update was that Prime members on Medicare can now receive unlimited access to 60 widely used prescription medicines for a mere $5 per month.
Amazon is also expanding in artificial intelligence (AI). Generative AI tools that integrate with its AWS platform -- like its model builder SageMaker, GenAI assistant Q, and Amazon Bedrock -- are being used by organizations of all sizes across a variety of industries. Amazon has also launched AI features for consumers, such as a shopping assistant called Rufus for U.S. mobile customers.
Amazon's mixture of revenue sources from both products, as well as services, continues to drive steady profitability, cash flow, and sales growth. This still looks like a fantastic business in which investors can park some capital for the long run.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rachel Warren has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy .
Most Popular
Comments / 0