If I Could Buy Only One Growth Stock, This Would Be It

In the vast world of equities, there are countless publicly traded companies across various markets globally. Investors often select specific companies to invest in, guided by personal preferences, risk tolerances, financial goals, investment time frames, and the amount of capital they can invest. This variation in individual circumstances makes it challenging to identify one particular stock that everyone should buy.

For me, the healthcare sector stands out, and my top pick for a growth stock is Vertex Pharmaceuticals. Here’s an overview of why investing in this company could be beneficial.

A Resilient Business Model

Economic cycles can have a significant impact on consumer spending and corporate performance. During downturns, many businesses see a drop in sales, which negatively affects their profits. However, companies that create and sell essential medications usually have some protection from these economic pressures. For instance, in times of financial hardship, doctors will continue to prescribe crucial drugs for conditions like cystic fibrosis (CF), a serious disease that can be life-threatening without treatment.

Vertex has been remarkably successful since the early 2010s, particularly due to its innovations in treating CF. The company is known for marketing the only approved therapies that address the root causes of this disease. This unique position gives Vertex a strong advantage in terms of pricing, allowing them a significant competitive edge.

While Vertex has made excellent progress in addressing the needs of CF patients (approximately 109,000 patients worldwide, including around 94,000 in primary markets like North America, Europe, and Australia), there remains potential for further growth. Currently, about 75% of eligible patients in those regions have begun treatment with Vertex’s most effective drug, Trikafta, while only 33% of patients in other markets have access.

Recently, Vertex received approval for a new CF medication called Alyftrek, which offers similar benefits but simplifies treatment by requiring only one daily dose compared to two doses for Trikafta. The company is also exploring new therapies for the small fraction of patients who are unable to benefit from its existing drugs, ensuring Vertex remains at the forefront of innovation in the CF landscape.

Diversification Efforts

Although products like Trikafta and Alyftrek will maintain patent protection until the late 2030s, the possibility of competing therapies emerging from other biotech firms continues to pose a risk for Vertex. Recognizing this, the company has recently worked to diversify its product pipeline. In 2023, it achieved FDA approval for Casgevy, a gene-editing therapy aimed at treating two rare diseases in collaboration with CRISPR Therapeutics.

Additionally, Vertex gained regulatory approval for Journavx, a medication designed to manage acute pain. This diversification indicates Vertex’s commitment to developing treatments beyond its primary focus on CF, and the pipeline includes several candidates at various stages of development. The company is actively pursuing label expansions for Journavx and running a phase 3 trial for a potential therapy for kidney disease related to APOL-1.

While not every initiative will succeed, Vertex’s broad approach increases its likelihood of achieving breakthroughs, as demonstrated by the approvals of Journavx and Casgevy. Investors can expect more innovative drugs to emerge from Vertex in the future.

A Strong Long-Term Investment

Vertex may not appeal to all investors, particularly those looking for dividend income, since the company does not currently distribute dividends. Others may prefer to invest in rapidly changing sectors such as artificial intelligence. However, for investors with a long-term horizon of ten years or more, Vertex Pharmaceuticals presents a compelling opportunity.

The company boasts a portfolio of medications likely to drive significant growth for years to come, supported by a reliable business model that thrives despite economic fluctuations. Vertex’s commitment to innovation suggests that there will be additional groundbreaking treatments launched in the future. This is why, if given the chance to buy just one stock at this moment, my choice would be Vertex Pharmaceuticals.

Authorial disclosure: The author holds stock positions in Vertex Pharmaceuticals. Consulting firms have positions in and recommend both CRISPR Therapeutics and Vertex Pharmaceuticals.

healthcare, investing, growth