With so many uncertainties in the current market, it makes sense to invest in a blue-chip health care company that is not dependent on the price of oil or the strength of the economy, asserts growth stock expert Mark Skousen, editor of Five Star Trader.
Vertex Pharmaceuticals (VRTX) is one such example. Based in Boston, Vertex is a biotechnology firm that specializes in treatments for cystic fibrosis (CF). CF is a progressive genetic disease that causes persistent lung infections and, over time, limits one's ability to breathe.
More than 30,000 people in the United States are living with the disease, as are more than 70,000 people worldwide. Historically, those who survived into adulthood didn’t generally live past the age of 38.
Over the years, Vertex has received approval from the U.S. Food and Drug Administration (FDA) for cystic fibrosis treatments that can help various groups of patients. It currently treats tens of thousands of patients around the globe with four approved drugs: Kalydeco, Orkambi, Symdeko and Trikafta.
Plus, 2021 was another banner year for Vertex. Product sales increased 22% to $7.6 billion. It has strengthened its mid- and late-stage pipelines. And it has two Phase III studies underway, with potential blockbuster results due this quarter. And business is still accelerating. The numbers are excellent.
Fourth-quarter earnings jumped by 28% on a 27% increase in revenue. The company enjoys a 37% operating margin. And management is earning a healthy 25% return on equity. Plus, the company has little debt and is sitting on $7.5 billion in cash.
Vertex is a serial innovator. And its broad clinical pipeline contains several molecules that can treat — and potentially cure — serious diseases outside of CF. For example, Vertex is also investigating new drugs to treat the more than 150,000 patients in the U.S. and Europe who have sickle cell anemia.
Despite its excellent prospects, the company sells for just 15 times my earnings estimate for the next 12 months. This is a low-risk stock with plenty of short-term trading potential. So, pick up Vertex Pharmaceuticals at market. And place a sell stop at $200 for protection.
