Nvidia has been a great stock in recent years, providing investors with incredible returns. However, there is a risk that expectations for the stock are too high, particularly when it comes to artificial intelligence (AI). And that means the stock could be vulnerable to a sell-off if reality doesn’t match the sky-high expectations that investors and consumers have created for AI.
The future of AI is difficult to predict. Much more predictable is the need for healthcare and the growing demand that will come from a larger and aging population. And with that in mind, investors may be better off investing in some unstoppable healthcare stocks that are poised to see strong growth in the coming years. Eli Lilly (NYSE:LLY), Novo Nordisk (NYSE:NVO)And UnitedHealth Group (NYSE:UNH) For investors, growth stocks may be safer than Nvidia. That’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 capitalization of around $700 billion. But there is still plenty of room for value appreciation, for two important reasons: Mounjaro and Zepbound. The former is his diabetes medication and the latter is his weight loss medication. Both are essentially the same because they contain the active ingredient tirzepatide, but they are approved for different indications. Together they could generate at least $50 billion in annual sales at peak times. For a company that reported $34 billion in sales for all of last year, that could mean incredible growth for Eli Lilly.
And there are many obesity-related issues and diseases that could benefit from tirzepatide, meaning there is potential to gain approval for additional indications, leading to even greater potential upside. For example, tirzepatide has been shown in a clinical trial to be effective in treating metabolic steatohepatitis, a form of fatty liver disease.
There’s also Eli Lilly’s early Alzheimer’s drug donanemab, which could receive Food and Drug Administration (FDA) approval this year. This could also become a blockbuster drug and bring the company billions in revenue.
Eli Lilly stock isn’t cheap, trading at more than 120 times its previous earnings. But with so much growth on the horizon, this could still be a fantastic buy in the long term. The healthcare stock could be the first to reach a $1 trillion market cap. There is a significant need to treat Alzheimer’s disease, obesity and diabetes. If the company has products that can help all of these areas, Eli Lilly could truly be an unstoppable stock in the long run.
2. Novo Nordisk
Novo Nordisk is similar to Eli Lilly in that it has some top-notch diabetes and weight loss treatments. Although it is approved for diabetes, Ozempic is popular on social media for its ability to help people lose weight. Wegovy is the company’s rising star in the weight loss space, and Novo Nordisk is rolling it out to more countries around the world. Demand for its drugs is so great that Novo Nordisk has invested billions in additional capacity.
In March, the FDA approved Wegovy as a treatment to reduce cardiovascular risk in obese and overweight people. With this approval, more health insurance companies plan to cover the treatment, as it becomes clear that it can be more than just an effective weight loss medication. Ozempic has now shown in a recent clinical trial that it can reduce the risk of kidney disease progression in patients.
As more studies are conducted, more uses for these treatments could be discovered, leading to regulators approving the drug for additional indications. The demand in the areas of obesity and diabetes is so great that both Eli Lilly and Novo Nordisk have room to excel in these categories and both companies can thrive. Instead of picking a winner, investors may want to consider owning both.
At 47x earnings, Novo Nordisk is a cheaper buy but slightly 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 big, breakthrough drugs in its portfolio, but its business can still generate impressive numbers over the years as the number of patients needing health insurance increases. And that’s likely to happen as the number of seniors increases in the coming years.
The company also invested in expanding its business activities. Last year, the company acquired LHC Group, a home health care company. It is also in the process of acquiring another similar company. Amedisys; However, this deal is not yet finalized.
UnitedHealth is already a huge company. The company had sales of over $370 billion and profits of over $22 billion last year. In the long term, she expects profit growth of around 13 to 16 percent.
The company has faced bad press recently due to a data breach at its Change Healthcare subsidiary, but that shouldn’t deter investors from owning leading healthcare company UnitedHealth Group, which has tremendous growth potential. Recent earnings numbers have been weighed down by the impact of the recent cyber attack, but based on estimated future earnings, UnitedHealth Group looks cheap – trading at a multiple of just 18.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in Nvidia and recommends it. 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