3 stocks to buy and hold forever

The conventional wisdom is that there are two important aspects of when to invest: when to buy a stock and when to sell it. But are there some stocks that allow you to remove the selling part?

Three Motley Fool contributors think the answer to that question is a resounding yes. Here’s why I see it AbbVie (ABBV 0.10%), Eli Lilly (LLY -1.21%)and Vertex Pharmaceuticals (VRTX 1.40%) as healthcare stocks to buy and hold forever.

The key to longevity

Keith Speights (AbbVie): What is the secret to longevity in the business world? Having the ability to adapt to a rapidly changing environment. If a company can adapt successfully, it will stay in business indefinitely. I think AbbVie is a master at adaptation.

Consider that in 2013 (the year it was spun off from Abbott Laboratories), AbbVie’s autoimmune disease drug Humira generated 57% of the company’s total revenue. Its product no. 2 at the time, AndroGel, made less than one-tenth the sales of Humira.

But Humira no longer has patent exclusivity. Is AbbVie Struggling to Decline Sales of Its Best-Selling Product? Not. The company has adapted. In the years leading up to Humira’s patent expiration, it invested heavily in research and development. And he made smart purchases.

These efforts paid off. In the second quarter of 2024, Humira accounted for just 19.5% of AbbVie’s total revenue. However, the drugmaker still posted more than 42% more revenue in the first half of this year than it did in all since 2013.

I have no doubt that the company will be able to survive and thrive in the future, regardless of the changes that occur. And it will pay shareholders handsomely along the way: AbbVie is a dividend king with a forward dividend yield of 3.2%.

Eli Lilly is a top buy-and-forget stock

David Jagielski (Eli Lilly): There aren’t many stocks that I’d feel comfortable saying you can buy and hold forever, but pharmaceutical giant Eli Lilly is certainly one of them. With a rich history of growth dating back over a century, the company has continuously found ways to grow and innovate.

Its best-selling products this year will likely be Zepbound (for weight loss) and Mounjaro (diabetes), and that may not change in the near future. Still, innovation will be a key part of its long-term success, and Eli Lilly is well equipped for it.

With strong fundamentals and a broad business spanning many therapeutic areas, Lilly has many ways to expand its operations over the long term. Cancer, immunology, neurodegeneration and pain are some of his areas of focus.

Then there are acquisitions that Lilly can pursue to sustain and accelerate its growth. It can afford to do this because it generates impressive profit margins of around 20%, which can help the business build up the cash it needs to pursue whatever growth opportunities it sees fit.

The successful drugs it has today can help Lilly generate revenue and profits that will help pave the way for new drugs to bring to market. Patents don’t last forever, which is why the company’s constant focus on innovation is what makes them a great stock to buy and own.

And that culture of growth is evident right at the top. CEO David Ricks, when talking about the company’s early gains in the weight loss market, doesn’t seem to be satisfied with Eli Lilly’s strong results and assets.

Instead, Ricks said in a recent interview that he aims to “exploit” the company’s lead in obesity treatment by bringing more products to market. This is the kind of leadership and mindset that can ensure Eli Lilly remains a top growth stock for decades.

A company with a winning vision

Prosper Junior Bakiny (Vertex Pharmaceuticals): Most businesses have a purpose or mission, something they are trying to achieve beyond making a profit. Having one doesn’t guarantee success, but it does help give the company a general direction.

Vertex Pharmaceuticals, a biotech leader, has set out to develop drugs for serious diseases, especially those for which there are few treatment options. The drugmaker is not alone in the industry with this focus, but it has been one of the best in the field.

Vertex has developed and currently markets the only medicines that treat the underlying causes of a rare disease called cystic fibrosis (CF). It has maintained this monopoly for over a decade, despite several large and successful drugmakers actively trying to mount a challenge.

Having a strategy means nothing without the ability to execute. Vertex has both, as evidenced by its CF findings. Biotechnology is moving beyond its core area of ​​expertise.

The latest launch, Casgevy, is a gene-editing treatment for two rare blood disorders. It should have more treatments in the coming years, including an acute pain therapy currently being evaluated for regulatory approval.

Its pipeline includes several other promising candidates. The past may not guarantee future success, but in Vertex’s case, its past performance is due to the underlying strengths that its business still appears to display.

There will be headwinds and setbacks; this is inevitable. However, Vertex Pharmaceuticals looks poised to deliver major medical breakthroughs, strong financial performance, and excellent stock returns over the long term. It is a fantastic stock to buy and hold forever.