October sometimes gets a bad rap from investors. Sure, several major stock market crashes have occurred during the month in the past. However, October has actually been a pretty good month for stocks historically.
Three Fool.com contributors have identified what they believe are no-brainer growth stocks to buy in October. Here’s why they picked Eli Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO), and Vertex Pharmaceuticals (NASDAQ: VRTX).
A plethora of growth opportunities
Prosper Junior Bakiny (Eli Lilly): Over the past two years, Eli Lilly’s brand has become almost synonymous with the weight loss market, and with good reason. The company is one of the leaders in this rapidly growing field thanks to Zepbound, a medicine whose sales are increasing at an almost scary pace.
However, while Eli Lilly’s anti-obesity medicines might be its most significant growth drivers for the foreseeable future, the company has a vast lineup and pipeline full of other products that will meaningfully contribute to its performance.
Recently, Eli Lilly earned approval for Kisunla, an Alzheimer’s disease (AD) therapy. The AD market is known as the graveyard of drug development: The overwhelming majority of attempts to develop novel medicines in this field have failed in the past 20 years. Eli Lilly succeeded, and considering the unmet need in AD, Kisunla will be an important product for the company.
Other newer medicines in Eli Lilly’s portfolio include cancer drug Jaypirca and a treatment for ulcerative colitis called Omvoh. Both were approved last year.
Going further back, even some of Eli Lilly’s older medicines are still seeing their sales grow at a good clip. That includes immunosuppressant Taltz, cancer drug Verzenio, and diabetes medicine Jardiance. That’s to say nothing of Eli Lilly’s pipeline, which features exciting programs across diabetes, obesity, various immunology conditions, rare diseases, and more.
Eli Lilly has many weapons in its arsenal, and the company continues to deliver excellent financial results. This is definitely a no-brainer stock to invest in this month, even as its shares have soared in recent years. There is, fortunately, plenty of upside left.
An unstoppable growth stock on sale
David Jagielski (Novo Nordisk): One of the best growth stocks to buy this month is Novo Nordisk. Its shares are down more than 15% in the past three months, and it’s now trading around the levels it was at back in February. If you’re a long-term investor, this could be a no-brainer buy right now.
Novo Nordisk is a huge player in the growing anti-obesity market. While consumers and investors may be most familiar with Ozempic, its diabetes drug which people have been using off-label to lose weight, it’s Wegovy that could be the company’s golden goose.
Wegovy is approved for weight loss, and Novo Nordisk is still in the early stages of rolling it out internationally. And its use can be much broader than just for weight loss applications. The Food and Drug Administration (FDA) has also approved Wegovy as a treatment to reduce cardiovascular risk in obese and overweight adults. By being more than just a weight loss drug, that increases the odds that health insurers will provide coverage for Wegovy, and that it can reach a broader number of people.
Right now, Wegovy isn’t Novo Nordisk’s top-selling drug, but it is the company’s fastest-growing product. Through the first half of the year, Wegovy grew at a rate of 74% (Ozempic is still growing, but at a slower rate of 36%), with revenue totaling 21 billion Danish kroner ($3.1 billion). Ozempic has generated nearly three times as much in sales, but investors shouldn’t underestimate the potential Wegovy possesses, as this can be the pharma company’s top seller in the future.
Due to the drop in share price, Novo Nordisk stock trades at 29 times its estimated future earnings (based on analyst expectations). That’s a bit lower than what it has averaged in the past. And with so much potential still ahead for Novo Nordisk, it can make for an excellent growth stock to buy today.
A monster in the making
Keith Speights (Vertex Pharmaceuticals): Don’t be fooled by Vertex Pharmaceuticals’ second-quarter results. Sure, the big biotech company generated year-over-year revenue growth of only 6%. The more important thing to focus on with Vertex, though, is what’s on the way.
We can start with Casgevy. Although Vertex won FDA approvals for the gene-editing therapy in December 2023 for sickle cell disease and January 2024 for transfusion-dependent beta-thalassemia, the launch is still only in its early innings. Look for Casgevy’s sales to begin ramping up next year.
Vertex awaits FDA approvals for two other drugs. Its vanzacaftor triple-drug combo for treating cystic fibrosis (CF) has a PDUFA date of Jan. 2, 2025. The FDA set a PDUFA date of Jan. 30, 2025, for an approval decision on its non-opioid drug suzetrigine in alleviating moderate-to-severe acute pain.
Looking just a little farther down the road, Vertex’s pipeline features two other drugs in late-stage testing that could be massive winners. Inaxaplin targets APOL1-mediated kidney disease (AMKD), while povetacicipet targets another kidney disease called IgA nephropathy. Both indications affect more patients than CF does.
I’m watching several of Vertex’s earlier-stage programs, but none more closely than VX-880 and VX-264. These islet cell therapies hold the potential to cure type 1 diabetes. There’s still a long way to go, but Vertex is cautiously optimistic that it’s on the right track with these programs.
Every drug I’ve mentioned could ultimately generate peak annual sales of $1 billion or more (and in some cases, significantly more), in my opinion. Vertex is already big, with a market cap of over $120 billion. I think it will grow much larger over the next decade, and that this biotech stock could realistically be a monster in the making.
Should you invest $1,000 in Eli Lilly right now?
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David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in Vertex Pharmaceuticals. Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
3 No-Brainer Growth Stocks to Buy in October was originally published by The Motley Fool
