Forget Nvidia, These Unstoppable Stocks Are Better Buys


Nvidia has been an amazing stock to own over the past few years, generating incredible returns for investors. But the risk is that expectations may be too high for the stock, especially with respect to artificial intelligence (AI). And that means the stock could be vulnerable to a sell-off if reality doesn’t align with the sky-high expectations investors and consumers have created for AI.

The future of AI is difficult to predict. What’s much more predictable is the need for healthcare, and the growing demand that will come from a larger and aging population. And in that sense, investors may be better off considering investing in some unstoppable healthcare stocks that are poised for a lot of growth in the years to come. Eli Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO), and UnitedHealth Group (NYSE: UNH) may be safer growth stocks for investors to consider than Nvidia. Here’s why these stocks look so attractive right now.

1. Eli Lilly

Eli Lilly has become the most valuable healthcare stock in the world with a market cap of around $700 billion. But there’s still much more room for it to rise in value, for two big reasons: Mounjaro and Zepbound. The former is its diabetes drug and the latter is its weight loss drug. Both are essentially the same as they contain the active ingredient tirzepatide, but they are approved for different indications. Combined, they could generate at least $50 billion in annual sales at their peaks. For a company that reported $34 billion in sales for all of last year, that could be an incredible amount of growth on the horizon for Eli Lilly.

And there are many obesity-related issues and illnesses that could benefit from tirzepatide, meaning there’s potential for it to obtain approval for more indications, leading to even greater possible upside. For example, in a clinical trial, tirzepatide has shown that it is effective in helping to treat metabolic dysfunction-associated steatohepatitis, a form of fatty liver disease.

On top of this, there’s also Eli Lilly’s early Alzheimer’s treatment, donanemab, which may obtain approval from the Food and Drug Administration (FDA) later this year, and that, too, could be a blockbuster drug and generate billions in revenue for the business.

Eli Lilly’s stock isn’t cheap, trading at more than 120 times its trailing earnings. But with so much growth on the horizon, this could still make for a fantastic long-term buy. The healthcare stock may be the first to reach $1 trillion in market cap. There’s a significant need to treat Alzheimer’s, obesity, and diabetes, and if the company can have products that can help all of those areas, then Eli Lilly could truly be an unstoppable stock to own in the long run.

2. Novo Nordisk

Novo Nordisk is similar to Eli Lilly in that it has a couple of top diabetes and weight loss treatments. Although it is approved for diabetes, Ozempic has been popular on social media for its ability to help people lose weight. Wegovy is the company’s rising star in weight loss, and Novo Nordisk is rolling it out to more countries around the world. Demand is so significant for its drugs that Novo Nordisk has been investing billions in additional capacity.

In March, the FDA approved Wegovy as a treatment to reduce cardiovascular risk in obese and overweight individuals. With that approval, more health insurance companies are planning to provide coverage for the treatment as it is becomes evident that it can be more than just an effective weight loss drug. Ozempic, meanwhile, has demonstrated in a recent clinical trial that it can reduce the risk that kidney diseases progresses in patients.

As more trials are done, there could be even more possible uses uncovered for these treatments, leading to regulators approving the drug for additional indications. The demand is significant enough in obesity and diabetes that there’s room for both Eli Lilly and Novo Nordisk to have stellar drugs in these categories and for both businesses to thrive. Rather than picking a winner between them, investors may want to consider owning both.

At 47 times earnings, Novo Nordisk is a cheaper buy but it is a bit less diversified than Eli Lilly. However, it also looks like an unstoppable stock.

3. UnitedHealth Group

UnitedHealth Group is a leading health insurance company in the country. It doesn’t have any major, game-changing drugs in its portfolio, but its business can still generate impressive numbers over the years as the number of patients needing healthcare coverage increases. And that’s likely to happen as the number of seniors rises in the years ahead.

The company has also been investing in expanding its operations. Last year, it acquired LHC Group, an in-home healthcare company. It is also in the process of acquiring another similar company, Amedisys; however, that deal hasn’t closed yet.

UnitedHealth is a massive business already. It generated more than $370 billion in revenue last year and its profit came in at over $22 billion. In the long run, it expects that its earnings will grow by around 13% to 16%.

The company has faced some bad press lately due to a data breach involving its subsidiary, Change Healthcare, but that shouldn’t dissuade investors from owning what’s a top healthcare company in UnitedHealth Group, which has a ton of growth potential. Its recent earnings numbers were weighed down by the effects of the recent cyber attack but based on its estimated future profits, UnitedHealth Group looks cheap — it trades at a multiple of only 18.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, consider this:

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Novo Nordisk and UnitedHealth Group. The Motley Fool has a disclosure policy.

Forget Nvidia, These Unstoppable Stocks Are Better Buys was originally published by The Motley Fool

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