3 pharmaceutical stocks that could make you richer in November (and beyond)

BManufacturers of ig drugs do not always show particularly impressive growth. As a result, their stocks sometimes hang around. Many of them pay dividends and delight investors looking for income. But growth-oriented investors are often left behind.

This is not always the case, however. We asked three Motley Fool contributors to choose pharmaceutical actions which have solid growth potential. Here is why they think Amgen (NASDAQ: AMGN), Pfizer (NYSE: PFE), and Eli lilly (NYSE: LLY) could make investors richer in November (and beyond.)

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An underrated drug maker

David Jagelski (Amgen): Investing in a growth stock that also pays dividends can make it easier to enrich your portfolio over the long term. Drugmaker Amgen fits the bill perfectly, paying a dividend yield of 3.2% well above the S&P 500 on average only 1.4%. The dividend alone could earn you over $ 320 each year on a $ 10,000 investment. Multiply that by the number of years you plan to hold the stock, and the bigger those numbers will be.

Dividends aren’t a guarantee, but they can be relatively safe when you invest in a company with strong financials, like Amgen. For three consecutive years, the company’s profit margin has been at least 28% of sales. It’s impressive, and when you pair that with long-term growth, it can pave the way for some fantastic results.

And growth is something Amgen can offer investors. In May, the Food and Drug Administration (FDA) approved Lumakras, the company’s non-small cell lung cancer drug. This is an important development because the drug can be used to treat patients with the KRAS G12C mutation, which Amgen says “has challenged cancer researchers for over 40 years, much to the considered to be ‘non-medicinal’ “.

Analysts believe the drug has the makings of a blockbuster, with annual sales exceeding $ 1.4 billion as of 2023. And that’s just for lung cancer; Amgen is also studying other indications for the drug, including the possible treatment of colorectal cancer.

This is why, even though Amgen most recent income report may be disappointing – its $ 6.7 billion revenue for the period ending Sept. 30 was only up 4% year-on-year – it could be an underestimated growth stock in the years to come. to come. Lumakras has already generated $ 45 million in revenue for the company this year.

To sweeten the deal, Amgen is also a cheap buy, futures trading course / benefit multiple of 13. This is considerably less than the 34 times the future profits investors pay to drugmaker Eli Lilly. Although it has been a difficult year for Amgen with its stock down 7% year-to-date while the S&P 500 has climbed 24%, its future looks bright and this can be a great option for a conservative investor who wants to get rich without taking a lot of risk.

A company built to last

Prosper Junior Bakiny (Pfizer): Most of the conversation around Pfizer lately has been about its coronavirus vaccine, Comirnaty, which it developed in collaboration with BioNTech. On the one hand, this is not surprising: Comirnaty has a profound effect on Pfizer’s financial results. During the third quarter As of September 30, the drugmaker reported sales of $ 24.1 billion, up 130% from a year ago.

You would expect to see revenue growth of this magnitude in the earnings report of a start-up tech company, not a seasoned pharmaceutical giant like Pfizer – and that performance has to be attributed to Comirnaty. That said, there are other reasons to consider adding Pfizer stocks to your portfolio.

Over the past two years, it has become a more focused business, with the elimination of its consumer health and off-patent medicine units, both of which had become dead weight on its bottom line. This change will allow the company to prioritize its most profitable biopharmaceutical businesses going forward, and on that front, things look very promising.

Pfizer claims 29 programs in Phase 3 studies and many more in early stage clinical trials. As the company obtains new approvals or label extensions, it will replenish its already strong lineup. In the third quarter, Pfizer minus Comirnaty revenue increased 7% year-on-year to $ 11.1 billion. This is much more in line with the company’s similar sized peers in the pharmaceutical industry.

Products such as the anticoagulant Eliquis and the anti-cancer drug Xtandi continue to stimulate growth. Sales of the former increased 21% year-on-year to $ 1.3 billion in the third quarter. Meanwhile, Xtandi’s revenue reached $ 309 million, up 16% from the previous year quarter. And in addition to its large pipeline, Pfizer has $ 20.57 billion in free cash flow that it can use to acquire promising clinical compounds from smaller drugmakers. Finally, Pfizer is a great option for investors looking for dividends, with a dividend yield of 3.23%, compared to 1.29% for the S&P 500.

After slightly exceeding the mark since the start of the year, I expect Pfizer to continue to do the same over the long term.

Shooting on all cylinders

Keith Speights (Eli Lilly): Few of the big drug companies are pulling all the cylinders like Eli Lilly. The company recently reported strong third quarter results. Revenue jumped 18% year over year, while adjusted profit climbed 38%.

Of course, much of that growth came from Lilly’s COVID-19 antibody therapy. But even taking those sales into account, the company’s revenue grew an impressive 11% year-over-year.

Lilly’s product line includes several big winners. Especially stand out the autoimmune disease drugs Olumiant and Taltz, the cancer drugs Cyramza and Verzenio, and the diabetes drug Trulicty. The new cancer drugs Retevmo and Tyvyt are also gaining momentum.

Pharmaceuticals stock has already climbed over 50% so far in 2021. Even with its relatively high futures earnings multiple, I think Lilly has more wiggle room. I am particularly watching two key regulatory approvals that may be coming soon.

Lilly is using a priority review voucher with his submission for FDA approval of tirzepatide for the treatment of type 2 diabetes. He has also initiated a continuous submission for FDA expedited approval of donanemab in the early treatment of Alzheimer’s disease.

10 stocks we prefer over Eli Lilly and Company
When our award-winning team of analysts have stock advice, it can pay off to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Equity Advisor, has tripled the market. *

They have just revealed what they believe to be the ten best stocks that investors are buying now … and Eli Lilly and Company was not one of them! That’s right – they think these 10 stocks are even better buys.

See the 10 actions

* The portfolio advisor returns on November 10, 2021

David Jagelski has no position in any of the stocks mentioned. Keith Speights owns shares of Pfizer. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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