Many growth stocks have experienced pressure over the last few years as investor sentiment has shifted amid the changing macroeconomic backdrop. While no one can predict what the market will do next, if you're investing for five, 10, or 15 years in quality businesses, near-term market movements shouldn't deter you from putting cash to work.
If you're looking for top growth stocks to add to your portfolio right now, here are two names to consider for your buy list.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals(NASDAQ: VRTX) has grown into a veritable giant over the last decade with its leadership in the cystic fibrosis therapeutics market. The company bears the distinction of being the only name in the industry with drugs approved that treat the root genetic cause of this disease. In fact, one of the linchpins in Vertex's business strategy is focusing on rare diseases or underserved disease areas for which there are minimal to no viable treatment options and developing treatments that target the root cause of these conditions.
The most recent approval for Vertex was Casgevy, the product of a long-standing partnership with CRISPR Therapeutics. Not only is Casgevy designed to be a one-time functional cure for both sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT), but it was also the first CRISPR therapy approved in history.
Because Casgevy is a gene-editing therapy, administration is a lengthy and highly involved process. Patients must prep to have their blood stem cells collected for around two months, and once they are collected, editing the cells for reinfusion takes anywhere from five to six months. Then, the patient must undergo chemotherapy before they can receive Casgevy, after which there is a recovery period.
Beyond the timeline to administer Casgvey, the therapy's $2.2 million price tag brings unique considerations for payers, so Vertex's ability to execute solid reimbursement agreements with public and private payers will be key. Vertex has actively been working alongside payers to achieve this goal. For example, in August, the company announced that it had reached a reimbursement agreement with England's National Health Service for eligible TDT patients to receive Casgevy.
While momentum from the gene-editing therapy will take time to manifest on the top and bottom lines, analysts think that Casgevy will bring in an additional $3 billion or more annually for Vertex in the future.
Beyond recent developments with Casgevy, Vertex has been going from strength to strength in other areas. It's awaiting approval for a new triple-combination cystic fibrosis therapy that could be even more effective than its existing flagship therapy, Trikafta. The company is also working on securing the regulatory green light for suzetrigine, its non-opioid drug for moderate to severe acute pain. Suzetrigine is also being studied as a treatment for diabetic peripheral neuropathy.
These are likely to be the two most near-term launches, but Vertex is also developing a stem-cell therapy designed to target the underlying cause of Type 1 diabetes, and drugs that target the root genetic causes of APOL1-mediated kidney disease (AMKD), myotonic dystrophy type 1 (DM1), and autosomal dominant polycystic kidney disease (ADPKD).
In the second quarter, Vertex reported product revenue of $2.65 billion, up 6% from the prior year period. The company has historically been very profitable, but its recent acquisition of Alpine Immune Sciences (a biotech that develops novel protein-based cancer immunotherapies), pushed its bottom line into the red in the three-month period. That should be a short-term phenomenon.
This follows the first quarter of 2024, in which it reported revenue of $2.69 billion, up 13% from one year ago, while net income popped 57% year over year to $1.1 billion.
Vertex looks like it's on a robust growth trajectory built on a solid foundation from its existing leadership in the cystic fibrosis space, and that's a growth story healthcare investors might want to capitalize on sooner rather than later.
2. Palantir Technologies
Palantir Technologies (NYSE: PLTR) builds and leverages software platforms that help government and commercial enterprises review, integrate, synthesize, and streamline data.
The big data analytics company originally focused on members of the intelligence community, but it's been slowly but surely diversifying its revenue streams to large public and private companies. Palantir's client base is diverse. It ranges from companies like United Airlines and Ferrari to the United States intelligence community and the Department of Defense. Its core products include Gotham, Foundry, Apollo, and its Artificial Intelligence Platform (AIP).
Gotham has historically been used by members of the U.S. and international intelligence communities to centralize intelligence gathering and drive better decision making across countless use cases, whether in planning missions, targeting enemies, or other military operations. Foundry helps corporate clients manage and analyze data to transform workflow processes, while Apollo helps to manage and utilize software that controls Palantir's various products in the cloud.
Palantir only launched its AIP in 2023, but it's already experienced rapid adoption among government and commercial clients to employ AI-driven decision making in real time.
AIP has been a major driver of Palantir's recent successes and appears to be increasingly integral to the company's long-term growth story. Not only have new customers been drawn to AIP, but many of Palantir's existing customers have added AIP to their long-term agreements with the company. Chief Revenue Officer Ryan Taylor gave some notable examples of the success of AIP with existing customers on the Q2 earnings call:
Tampa General signed a seven-year expansion, deploying AIP to deliver a care coordination operating system, where we've helped them reduce patient length of stay by 30%. Panasonic Energy of North America signed a three-year expansion using AIP across finance, quality control, and manufacturing operations.
Palantir is now in the process of launching its latest product, called Warp Speed. Chief Technology Officer Shyam Sankar said that Warp Speed is designed "to power American reindustrialization" and was envisioned as "an operating system for the modern American manufacturer." Sankar said that the new back-end platform is built on AIP with industrial AI and was formulated from years of helping industrial customers build everything from automobiles to planes.
For the second quarter of 2024, the company generated $678 million in revenue, up 27% year over year. Government revenue totaled $371 million, while commercial revenue came in at $307 million. Those figures were up 23% and 33%, respectively, from one year ago. Palantir closed 27 deals worth over $10 million in business revenue in the three-month period alone, while its customer count jumped 41% from one year ago. Profits for the three-month period totaled $134 million, although Palantir has brought in net income of about $405 million over the last 12 months.
The stock's on a winning streak right now, but the long-term picture for this business looks even more enticing for investors.
Should you invest $1,000 in Vertex Pharmaceuticals right now?
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics, Kinder Morgan, Palantir Technologies, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
