The market has taken investors for a wild ride of high highs and low lows over the past year. Regardless of what happens with the market in the next few weeks or even the next few months, history has shown investors many times over that those who stay with the market through its ups and downs and continue to invest in wonderful businesses can grow their returns with time.
And while many growth-oriented businesses continue to contend with a bearish environment from investors, it also remains a fact that there has never been a bear market from which the broader market has not only recovered but eventually outpaced its returns from the period prior. If you’re looking for two fantastic stocks to add to your buy basket right now, here are two names to consider scooping up before the next bull market run.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ: VRTX) has gone from strength to strength in a market that has been plagued by volatility. The stock is trading up by double-digits from just one year ago, compared to the S&P 500‘s negative return of about 10% in that same window of time. The company’s continued resilience in a challenging environment stems from the strength of its core underlying business.
With the only drugs on the market that treat the underlying cause of cystic fibrosis — one of them which covers more than 90% of all cystic fibrosis patients in the U.S. alone — it’s safe to say that the demand for Vertex Pharmaceuticals’ products is consistent and ongoing. The company has seen revenue and profits skyrocket by 193% and 58%, respectively, over the last five years. Vertex Pharmaceuticals has much more than its profitable cystic fibrosis portfolio up its sleeve, however, with a robust pipeline that aims to disrupt many other areas of the rare disease drug market.
Two stem cell therapies for Type 1 diabetes, a drug that would be the first if approved to treat the underlying cause of the rare genetic ailment APOL1-mediated kidney disease, a non-opioid drug candidate for acute pain, and a CRISPR therapy that could pose a one-time functional cure for two rare blood disorders garner notable mention from this list. That rare blood disorder therapy, exa-cel, could garner approval as soon as this year as the company just finished submitting its regulatory package to the U.S. Food and Drug Administration and has already done so for EU and U.K. regulators. Investors seeking a high-growth healthcare stock with a promising and wide-ranging runway ahead may want to take a long, hard second look at this stock.
2. Lululemon
Lululemon Athletica (NASDAQ: LULU) has become a household name since its inception more than two decades ago, with its range of eye-catching athleisure apparel and accessories. Despite the fact that consumer spending remains in a highly volatile space in a challenging economic environment, it would appear that consumers are still willing to shell out cash for the versatile garments that Lululemon sells. Moreover, this is a business that operates in a wide and growing addressable market, one that, despite the possibility of a recession in the near future, is on track to hit a global valuation of $663 billion by the year 2030.
If you’re an investor looking to capitalize on the growth potential of this industry, Lululemon looks to be an increasingly intriguing opportunity to do so. In a landscape where consumers are curtailing outlay on non-discretionary expenditures, the company’s brand loyalty, robust online and in-store presence, and highly wearable products are continuing to rake in revenue and profits. The company reported revenue of $8 billion in the full-year 2022, up 30% year over year. Comparable-store sales and direct-to-consumer net revenue jumped by respective constant-dollar amounts of 19% and 35% in 2022, while the latter constituted 46% of all revenue in the 12-month period, compared to 44% the year prior.
Even as its profits came down slightly compared to 2021, mostly because of a non-cash writedown related to its prior Mirror acquisition, earnings still totaled about $855 million for 2022. Lululemon closed out the year with cash on its balance sheet in the amount of $1.2 billion. With a significant market footprint, profitable business, and its continued implementation of its Power of Three x2 Growth plan that includes core investments in its digital and international presences, the company looks well on its way to hitting $12.5 billion in revenue by 2026, which would be double its 2021 revenue. Investors who stay along for the ride could reap generous rewards in the form of share price returns in the process.
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica and Vertex Pharmaceuticals. 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.
