3 no-brainer stocks to buy in September

Don’t want to overthink your investment decisions? Then go with stocks of highly profitable companies with strong growth prospects.

Three Motley Fool contributors have identified several stocks that fit this description. Here’s why they think Eli Lilly (LLY 2.11%), Novo Nordisk (NGO 1.19%)and Vertex Pharmaceuticals (VRTX 0.52%) are healthcare stocks not to buy in September.

The growth machine that never runs out of opportunities

David Jagielski (Eli Lilly): Eli Lilly continually gives investors reasons to get even more bullish on its already abundant growth opportunities. Right now, it’s all about the growth and potential of tirzepatide — the active ingredient in its type 2 diabetes and weight-loss drugs Mounjaro and Zepbound.

On August 20, Eli Lilly released the results of a phase 3 trial involving tirzepatide, further highlighting what a game-changer the drug could be for the healthcare industry. In the 176-week study, participants who were pre-diabetic and who were overweight or obese were able to reduce their risk of developing type 2 diabetes by 94% as a result of weekly injections of tirzepatide.

That’s a huge reduction in risk that could lead to even greater demand for Mounjaro, which is now Eli Lilly’s best-selling blockbuster drug. Last quarter (which ended June 30), its revenue topped $3.1 billion and tripled the $980 million generated in the year-ago period.

Eli Lilly is still in the early stages of not only getting Zepbound and Mounjaro to patients, but also studying the drug’s possible widespread benefits. And as these indications begin to accumulate, doctors may see more reasons to prescribe the drug. While weight loss may be the most popular reason patients want to try it, reducing the risk of diabetes, heart failure, sleep apnea, and many other obesity-related problems could lead to greater insurance coverage for tirzepatide and unlock many more growth opportunities for Eli Lilly.

The stock possesses a lot of potential and is an absolute no-brainer buy as its sales and profits will continue to grow for years to come.

It’s not too late to jump in

Prosper Junior Bakiny (Novo Nordisk): One of the challenges of investing in stocks is knowledge When to buy shares in a company. Investors should “buy low,” but does it ever make sense to buy stocks after they’ve gone up? Yes. When a stock has a solid outlook and looks set to continue to beat the market, any point can be considered “low.” Novo Nordisk is still on what appears to be an unstoppable growth path.

Sales of the company’s two main drivers of growth, Ozempic (type 2 diabetes) and Wegovy (weight), grew rapidly. Novo Nordisk aims to win various label extensions for both drugs, which will boost their sales. These successes are no accident. Novo Nordisk has been a market leader in diabetes medicines for around 100 years. It is a pioneer in the GLP-1 receptor agonist space, now leading the rapidly growing weight loss market. While many companies want to challenge Novo Nordisk, most fall short.

The company boasts one of the most promising GLP-1 drugs in development: Cagrisema, which could generate $20.2 billion in revenue by 2030, according to some estimates. Cagrisema, which is currently in advanced testing, is by no means the only promising product in Novo Nordisk’s pipeline. It features several other candidates targeting weight loss and other areas. Novo Nordisk’s plan to diversify its lineup is slowly taking shape as the company develops drugs for various other diseases. The drugmaker’s portfolio should look different and much more diverse in five years.

One thing that won’t change is the company’s ability to generate strong revenue, earnings and stock market outperformance. Novo Nordisk remains a no-brainer for healthcare investors.

Six reasons to buy this biotech stock

Keith Speights (Vertex Pharmaceuticals): Currently, Vertex Pharmaceuticals has a blockbuster drug in its lineup — Trikafta/Kaftrio. Cystic fibrosis (CF) therapy is a massive winner, on track to reach more than $10 billion in sales this year. However, Trikafta/Kaftrio is not the main reason to buy this biotech stock. There are six more reasons.

First on the list is Casgevy. It is the first CRISPR gene editing therapy on the market. Casgevy not only treats sickle cell disease and transfusion-dependent beta-thalassemia, it cures the two rare blood diseases. Not surprisingly, Vertex sees the product as a billion-dollar opportunity.

The company is awaiting regulatory approvals for the second and third reasons to buy shares. The US Food and Drug Administration (FDA) has set a PDUFA date of January 2, 2025, to make an approval decision on Vertex’s newest CF therapy, a three-drug combination containing vanzacaftor. And the FDA expects to announce its approval decision for suzetrigin in the treatment of acute pain on January 30, 2025. Both drugs are likely to be blockbusters if approved (which seems likely).

Reasons four and five require a bit more waiting. Vertex is evaluating two other drugs in pivotal clinical trials. Inaxaplin targets APOL1-mediated kidney disease, which affects about 100,000 people (about 8,000 more than CF). Povetacicept, meanwhile, is a “pipeline-in-a-product” targeting autoimmune kidney disease.

What is the sixth reason to buy Vertex? Its pipeline from the previous phase. The biggest game changers to watch out for are the VX-880 and VX-264. Both are islet cell therapies that have the potential to cure type 1 diabetes.

Vertex doesn’t need all these programs to be able to grow much more over the next decade. However, I suspect most will, and I think the stock is absolutely a buy.