Forget Eli Lilly and Novo Nordisk: This might be the best weight loss stock to buy right now

If you want to invest in the fast growing weight loss industry, go with stocks like Eli Lilly or Novo Nordisk it may seem like a great idea. They have top-notch weight loss products and have some promising long-term growth opportunities. But they are already among the most valuable healthcare stocks in the world (their valuations exceed $500 billion). At some fairly high valuations, the upside potential of these stocks may not be as great as they might be for other, more modestly valued investments.

One stock that may end up generating stronger returns for investors is the pharmaceutical company Amgen (AMGN 0.32%). At a market cap of less than $200 billion, it’s by no means a small stock to invest in, but it could still have room to double or triple in value given that it could become a major player in the glucagon-like peptide-1 (GLP-1) weight loss market.

Amgen may have a game-changing GLP-1 drug in its pipeline

Among the most popular GLP-1 injectables on the market for weight loss today are Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy. Both drugs can help patients lose around 15% to 20% of their body weight, or even more in some cases. But they are weekly injections, and patients who stop taking the drugs also run the risk of regaining some or all of the weight they lost from using them.

Amgen does, however, have a drug that may only need to be taken monthly (or even less frequently than that), and one study showed that users may not gain weight back if they stop. According to an early phase 1 study, MariTide helped patients lose about 15% of their body weight after a 12-week period. It’s an early-stage study, but it’s still an encouraging one, especially since it can achieve similar results to other leading GLP-1 drugs and may need to be taken less frequently.

If Amgen ends up getting approval for MariTide, it could drastically improve its growth prospects and lead to much more excitement and optimism around the stock.

The company’s existing operations also look great

It’s not just the potential for Amgen in the GLP-1 market that could make the healthcare stock a good buy, its existing operations are also robust and diverse, making it an ideal option for long-term investors.

In recent years, Amgen has used acquisitions to strengthen its portfolio. It acquired cancer company ChemoCentryx and last year acquired Horizon Therapeutics, which gave it access to a thyroid disease treatment, Tepezza, that could bring in peak annual revenue of nearly $4 billion.

During the second quarter, Amgen generated total sales of $8.4 billion, which were up 20% year over year. Amgen had several drugs grow at rates of more than 20 percent, including cholesterol drug Repatha, whose sales totaled $532 million and rose 25 percent year over year.

Given the company’s broad portfolio and some strong assets that can help Amgen’s business grow much further in the future, the stock has the potential to become an excellent growth investment to hold onto for the long term.

Amgen could be making an undervalued buy right now

Shares of Novo Nordisk and Eli Lilly are up more than 25% this year, while Amgen shares are up but at a much more modest 11%. There isn’t that much excitement surrounding the stock, but that could change if it ends up getting approval for MariTide. This is by no means a certainty — there will always be some risk in investing based on the hope that a drug will come to market in the future.

But with Amgen, it’s a calculated risk I think is worth taking because this is not just a GLP-1 investment. Amgen’s broad and growing business makes it one of the safer healthcare companies to hold in your portfolio today. And with the stock trading at just 16 times estimated forward earnings (based on analyst expectations), it’s a possible steal of a deal at its low valuation.