Most investors would like to see their stock portfolio grow significantly, especially if they still have a few years left before retirement. Moreover, sophisticated investors would seek such growth without the risks associated with investing in speculative stocks.
Alphabet (GOOG 0.02%), Vertex Pharmaceuticals (VRTX -1.12%), Eli Lilly and company (THERE IS 0.35%)and Meridian Bioscience (VIVO 0.06%) all show strong potential to grow your investments significantly. While these companies don’t promise overnight riches, they also don’t carry the significant risks typically associated with growth stocks. Yet all have the potential to grow five times their current size in the coming years.
Indeed, these companies already have a profitable foundation that benefits from long-term trends that allow them to diversify with new ways to generate revenue and profitability.
Alphabet announces continued growth
Alphabet shares are up 105% over the past five years. There’s plenty of likely growth in store for this parent company of search engine Google and video giant YouTube, despite its shares falling more than 29% this year.
Alphabet has built a huge competitive moat and remains highly profitable, even with lagging online ad revenue this year. It will be difficult for another search engine to come forward and bring down Google, and the same goes for another video platform to challenge YouTube.
Alphabet has grown quarterly revenue by 168% over the past five years, and halfway through 2022, that trend doesn’t appear to be slowing. The company posted half-year revenue of $137 billion, up 17.5% year-on-year, with an operating margin of 28.7%, down slightly from 30.5% from the same period last year.
Alphabet has long been an investor favorite, but that has also made it an expensive stock. However, it now trades at around 19 times its earnings, making it a bargain for such a profitable business.
Vertex Pharmaceuticals builds on its base
Biotech company Vertex Pharmaceuticals already has a strong franchise in therapies to treat the inherited lung disease cystic fibrosis (CF). Now he’s using the profits from those therapies to fund exa-cel, a potentially successful gene therapy he’s developing with. CRISPR therapeutics. The company expects to complete its regulatory approval filing for exa-cel with the Food and Drug Administration by the first quarter of 2023. It could see benefits from the therapy as early as the middle of next year. Exa-cel is considered a potential cure for two genetic blood diseases that now require frequent transfusions: beta-thalassemia and sickle cell disease.
Shares of the stock are up 93% over the past five years, while its quarterly earnings jumped 303% over that time. However, despite the bottom line showing steady growth, its PE ratio fell to its lowest in five years at 24, as seen in the chart below. Nevertheless, with exciting prospects ahead, Vertex Pharmaceuticals stock can easily grow five times its current value in the coming years.
Eli Lilly is not resting on its laurels
It’s hard, at first glance, to see Eli Lilly as a growing company because it was founded in 1876 by a Civil War veteran, but over the past five years the pharmaceutical giant has seen its share price climb 283% as its annual revenue soared. a solid 33%.
Shares of the company are up just over 23% this year. What’s exciting for investors, however, are Lilly’s potential new revenue drivers.
Lilly’s latest diabetes drug, Mounjaro (tirzepatide), was launched earlier this year and was the first drug to stimulate GLP-1 and glucose-dependent insulinotropic polypeptide receptors to treat type 2 diabetes. The drug has been shown to improve blood sugar control and help patients lose weight, which is an important factor for type 2 diabetes. In the first quarter, Mounjaro achieved sales of 16 million dollars. The drug’s potential as a weight-loss drug could make it a blockbuster.
Lilly has two other drugs that are seeing tremendous revenue growth. Breast cancer drug Verzenio earned $588.5 million in the second quarter, up 72% year-on-year, and diabetes drug Trulicity earned $1.9 billion, up 25% compared to the same period last year.
The company has another exciting drug, donanemab, which has shown progress in slowing symptoms related to Alzheimer’s disease, and is awaiting FDA approval.
Meridian tests the growing waters
Meridian Bioscience develops diagnostic systems and manufactures antigens, antibodies and other diagnostic biological materials used by researchers and healthcare institutions.
Shares of the company are up 54% so far this year and more than 116% over the past five years.
The company received a huge boost during the COVID-19 pandemic as its tests were needed for COVID testing and by companies seeking therapies to treat the disease. However, the trend that sparked the company’s big wins isn’t going away – the need to rapidly develop tests to diagnose and treat a variety of diseases. Diagnostic testing has become a sustainable market where Meridian is a key player.
In the third quarter, Meridian reported revenue of $67.8 million, up 7% year-over-year, led by its diagnostics segment, which saw revenue increase 36% from the same period last year to reach $42.4 million. The company’s nine-month revenue was $267.3 million, up 10.6% from the same period last year.
Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Jim Halley holds positions at Alphabet (C-shares), CRISPR Therapeutics and Meridian Bioscience. The Motley Fool owns and recommends Alphabet (A shares), Alphabet (C shares), CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.