Key Points

• Vertex Pharmaceuticals has faced clinical trial disappointments, and illegal competition for some medicines.

• Despite these roadblocks, its financial results remain solid.

• The biotech's pipeline should also yield more key approvals.

• 10 stocks we like better than Vertex Pharmaceuticals ›

Vertex Pharmaceuticals (NASDAQ: VRTX) is usually a market-beater, but it hasn't been so over the past year. The company's shares are down 18% over the trailing-12-month period due to a combination of headwinds.

While that's not the best news for current shareholders, it may be great for those considering buying the stock. If the biotech can recover and get back to its market-beating ways, now might be a great time to initiate a position. Let's figure out whether Vertex still has what it takes.

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What's gone wrong?

Vertex Pharmaceuticals faced several clinical setbacks over the past year. First, its drug suzetrigine (now marketed under the brand Journavx) disappointed in a phase 2 clinical trial for painful lumbosacral radiculopathy. While Vertex initially said it would explore ways to advance the medicine to phase 3 studies in this indication anyway, it eventually abandoned that project.

Second, the company's candidate VX-993 also failed in phase 2 studies as an investigational monotherapy for acute pain.

Image source: Getty Images.

Third, Vertex abandoned one of its candidates for type 1 diabetes (T1D), VX-264, after another failure in early-stage trials.

In addition to these unfavorable developments from the clinic, financial results in the first quarter were not as strong as expected. This was partly due to illegal knockoffs of some of the company's medicines in Russia, which resulted in a loss of market share. For all these reasons, Vertex Pharmaceuticals has experienced several significant one-day price drops over the trailing-12-month period.

Why the stock is still attractive

Despite all the noise, Vertex's financial results remain strong. In the second quarter, revenue increased by 12% year over year to $2.96 billion. Net income was $1 billion, versus a net loss of $3.6 billion in the second quarter of 2024 (although that loss was a one-off due to expenses related to an acquisition).

Vertex Pharmaceuticals' newest launches include Alyftrek, in its core therapeutic area of cystic fibrosis (CF); Journavx, in the treatment of acute pain; and Casgevy, which treats two rare blood disorders.

Alyftrek, which earned approval in December, is already making meaningful contributions. It racked up $156.8 million in revenue during the quarter. It should maintain a solid upward trajectory for a long time, as Vertex Pharmaceuticals makes headway within the remainder of its CF addressable market.

Journavx should also see significant traction in the coming quarters. It became the first oral non-opioid pain signal inhibitor approved by the U.S. Food and Drug Administration. In the U.S., more than 150 million patients are already covered for reimbursement for the medicine.

Casgevy is a different story. It's a gene-editing therapy that's complex to administer, so since its approval in 2023, it's generated little in sales for Vertex Pharmaceuticals. However, even this product boasts significant potential, being a one-time cure for diseases for which there are very few safe treatment options.

Revenue and earnings should continue moving in the right direction in the next five years. But what about Vertex's clinical setbacks? Every biotech company experiences some. It's part of the process.

Developing novel medicines is inherently risky and expensive. But even in that department, Vertex should make progress. It's testing suzetrigine in phase 3 studies for diabetic peripheral neuropathy, while also conducting a phase 2 trial for VX-993 in that indication. And the late-stage pipeline features another medicine for T1D, zimislecel. Based on strong data from ongoing studies, the biotech plans 2026 regulatory submissions.

It has other promising compounds in phase 3 studies, including inaxaplin in APOL-1-mediated kidney disease and povetacicept in IgA nephropathy. There's a good chance that in the next five years, Vertex Pharmaceuticals will add two brand-new medicines to its lineup, while gaining an additional indication for Journavx, which could become a blockbuster.

In the meantime, early-stage programs for pain, CF, and other diseases should also make progress. In short, with a robust pipeline and its lineup still driving top-line growth, Vertex Pharmaceuticals' shares remain attractive, despite its underperformance over the past year. Now is a great time to buy the stock.

Should you invest $1,000 in Vertex Pharmaceuticals right now?

Before you buy stock in Vertex Pharmaceuticals, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,657!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,993!*

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*Stock Advisor returns as of August 18, 2025

Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

Key Points

• Both companies are posting strong financial results this year, despite headwinds.

• They have raised their dividends annually for a combined 110 years.

• 10 stocks we like better than Medtronic ›

Dividend stocks aren't all created equal. Some decrease their payouts, or suspend them altogether, when they face headwinds. Others have much stronger businesses and continue to raise their dividends even as they face obstacles. Income seekers want to stay away from the former and invest in the latter. One imperfect way to determine which is which is to look at their track records.

Of course, the past doesn't guarantee anything, but companies with a long history of raising their dividends often have what it takes to continue down that path. Let's consider two dividend stocks that have impeccable credentials in that department and are still worth investing in today: Medtronic (NYSE: MDT) and Johnson & Johnson (NYSE: JNJ).

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Image source: Getty Images.

1. Medtronic

Medtronic, a leading medical device company, may face headwinds due to the impact of tariffs on its financial results. However, the stock has performed well this year. Its most recent financial results came in ahead of analyst estimates, and the company even increased its earnings guidance for its ongoing fiscal year 2026, which started on April 26.

Although Medtronic has encountered some issues in recent years, the healthcare giant has taken steps to rectify the situation. One of its focuses is improving profitability. Medtronic has explored spinning out some of its divisions before. It finally settled on diabetes care, its only consumer-facing business, and one that generates lower margins than the rest of its operations. The initiative should help the company boost the bottom line somewhat.

Meanwhile, Medtronic's underlying business remains strong. The company is one of the world's largest medical device manufacturers, with operations spanning multiple therapeutic areas. It continually develops and markets new products, resulting in consistent revenue and earnings growth.

One important approval it should soon earn is for its robotic-assisted surgery (RAS) device, the Hugo system; that should have a meaningful impact on its financial results, given the significant white space available in surgical robotics. Furthermore, the sustained higher demand for medical procedures should be a powerful tailwind for the company, as many of its product sales are tied to procedure volume.

Medtronic has increased its dividends for 48 consecutive years, a streak that points to a company capable of weathering any storm. The stock's current forward yield of 3.1% looks attractive compared to the S&P 500's average of 1.3%. This is a top dividend stock investors can double down on today.

2. Johnson & Johnson

Johnson & Johnson is also facing issues, including tariff-related ones, and generic competition for its immunology medicine Stelara. Still, the pharmaceutical giant is performing well. Its second-quarter results were strong, and it also increased its guidance for the fiscal year 2025.

J&J's pharmaceutical segment is well-diversified, with products in immunology, oncology, neuroscience, infectious diseases, and more. Thanks to robust research and development (R&D) spending and significant experience in the field, the company consistently launches new products that help mitigate losses from those that fall out of patent protection. It's done the same in recent years, which is why, despite Stelara's recent challenges, the top line continues to move in the right direction. That's a great sign for investors.

Johnson & Johnson's medical device segment also adds to its diversification. The company is looking to dip its toes in the RAS market with its Ottava system, which is still undergoing clinical trials in the U.S. The Ottava could be a critical addition to the company's arsenal.

It's true that J&J has recently faced legal and regulatory challenges, including lawsuits and government-imposed price negotiations. While these are worth monitoring, it's important to remember that Johnson & Johnson is a Dividend King, with 62 consecutive years of dividend increases. The company has been through a great many things over that time frame, including the establishment of Medicare and Medicaid, which completely transformed the U.S. healthcare sector.

Johnson & Johnson has survived -- and thrived -- over the long run despite similar challenges in the past, and the company remains more than capable of fulfilling its financial obligations. That's why it has a higher credit rating than the U.S. government. Despite recent headwinds, Johnson & Johnson remains a top income stock worth investing in for the long term.

Should you invest $1,000 in Medtronic right now?

Before you buy stock in Medtronic, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medtronic wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,657!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,993!*

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See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool recommends Johnson & Johnson and Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.

Key Points

• Iovance Biotherapeutics' leading product, Amtagvi, is generating decent sales.

• However, the medicine is expensive and difficult to administer.

• Iovance looks risky, and the stock is unlikely to meet Wall Street's price target.

• 10 stocks we like better than Iovance Biotherapeutics ›

There's at least one good thing to say about Iovance Biotherapeutics (NASDAQ: IOVA), a small-cap biotech. The drugmaker is an innovative company. It developed Amtagvi, a medicine that became the first of its kind approved for advanced melanoma (skin cancer).

However, this breakthrough hasn't led to solid performances. Since Amtagvi's launch last year, Iovance Biotherapeutics' stock has been southbound. Even so, with an average price target of $9.10, which implies a potential upside of 261% from its current levels, Wall Street continues to have faith in the company. Should investors consider buying Iovance Biotherapeutics' shares?

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Image source: Getty Images.

What's going on with Iovance Biotherapeutics?

The process involved in manufacturing and administering Amtagvi is complex. It requires physicians to collect a piece of the patients' tumors from which they extract T cells (which, among other things, help fight cancer) to grow in a lab. From that, patient-specific infusions of Amtagvi are manufactured in a specialized facility. Before receiving Amtagvi, patients have to undergo chemotherapy. The entire process typically takes over a month.

There are also significant expenses associated with the medicine that wouldn't exist if Amtagvi were an oral pill. All these factors have made it challenging for Iovance Biotherapeutics. Earlier this year, the company revised its guidance after realizing it had been too optimistic with its estimates of activating authorized treatment centers where Amtagvi can be administered to patients.

Still, Amtagvi is generating decent sales. In the second quarter, Iovance Biotherapeutics reported revenue of about $60 million, almost double what it reported in the year-ago period. Most of that was from Amtagvi. The company's other commercialized product, Proleukin, another cancer medicine, generates relatively little revenue. For fiscal 2025, Iovance expects total product revenue of $250 million to $300 million. Again, most of that will be from Amtagvi. That's not bad for a medicine that was only approved last year.

Is there more upside for the stock?

Those bullish on the stock might point out several things. First, Amtagvi could earn approval in other regions within the next 12 months, including Canada and Europe. That would significantly expand Iovance Biotherapeutics' addressable market. Considering the medicine could generate upward of $200 million in the U.S. the year after approval, the global opportunities look attractive.

Second, even in the U.S., Iovance has barely scratched the surface of the patient population it is targeting. Amtagvi is indicated for melanoma patients who have undergone some prior therapies unsuccessfully. In the U.S., 8,000 patients die from the disease every year. Even if not all of them would be eligible for Amtagvi, it is certainly a lot more than the just over 100 Iovance has treated so far.

Third, Amtagvi could earn important label expansions down the line. The medicine is being investigated across a range of other indications, including lung, endometrial, and cervical cancer. If it can score phase 3 clinical wins, that could expand the therapy's target market and jolt Iovance Biotherapeutics' stock price.

However, even with all that, the biotech remains a risky bet. The complex and expensive nature of the medicine it develops and manufactures will make it challenging to gain significant traction while allowing it to turn a profit. Expanding into new territories will help Amtagvi's sales, but it will also significantly increase its expenses.

Further, Iovance isn't exactly cash-rich. The company ended the second quarter with about $307 million in cash, equivalents, and restricted cash, which it believes will enable it to last until the fourth quarter of next year. That's not very long. Amtagvi-related sales and various financing options it could pursue should allow it to keep the lights on even longer, but it's rarely a good sign when a company says that its cash will run out within a year and a half.

Finally, Iovance Biotherapeutics could encounter clinical and regulatory obstacles with Amtagvi, which could negatively impact its stock price. The biotech stock looks too risky for most investors. I don't expect Iovance Biotherapeutics to hit its average Wall Street price target in the next 12 months.

But investors with a large appetite for risk might still want to consider initiating a small position in the stock. Given its innovative potential and the possibility that it will execute its plan flawlessly, its shares could skyrocket.

Should you invest $1,000 in Iovance Biotherapeutics right now?

Before you buy stock in Iovance Biotherapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Iovance Biotherapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,657!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,993!*

Now, it’s worth noting Stock Advisor’s total average return is 1,057% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics. The Motley Fool has a disclosure policy.

Key Points

• Investing in industry leaders with strong growth prospects is a great way to start your portfolio.

• These three stocks below meet the criteria and offer slightly different benefits to investors.

• 10 stocks we like better than Berkshire Hathaway ›

Building a portfolio capable of earning strong returns over long periods is not easy, but there are some basic principles we can try to follow to simplify the task. One is to start with companies that are well established in their fields and have robust operations. Some speculative stocks might have a place in a well-built portfolio, but it shouldn't be a prominent place.

Another principle to follow is diversification. Filling a portfolio with stocks from a single industry is usually not a wise strategy. Of course, many stocks on the market could serve as excellent anchors for a well-rounded portfolio. The members of the so-called "Magnificent Seven" immediately come to mind.

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Even without including those, though, it's possible to start strong with these three top stocks: Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), Shopify (NASDAQ: SHOP), and AbbVie (NYSE: ABBV).

Image source: Getty Images.

A well-run, diversified conglomerate

Led by Warren Buffett, who is often regarded as the greatest investor of all time, Berkshire Hathaway has consistently produced impressive returns over the long term. The company accomplished this feat largely thanks to Buffett's philosophy. The Oracle of Omaha and his team built a conglomerate with dozens of subsidiaries across various industries, including railroads, energy, insurance, and apparel.

It's hard to find a single corporation that's more diversified than Berkshire Hathaway. And that's before we consider the company's portfolio, which includes investments in corporations across even more sectors. Berkshire Hathaway's diversified operations are a major strength that allows it to navigate challenging economic downturns.

Some might point out that Buffett will step down from his role as CEO by the end of the year. Can Berkshire Hathaway continue to perform well post-Buffett?

My view is that it can. Buffett has been working on picking his successor for a long time. Stepping into the role is Greg Abel, current VP of Berkshire Hathaway's non-insurance operations. There will be others to help him who have also been with the company for a while, some of whom have had significant roles. Buffett's philosophy will outlive his tenure as the head of Berkshire Hathaway.

That, combined with the robust and diversified business it has built, should allow the company to continue performing well for a long time. Berkshire Hathaway is a top stock to build your portfolio around for those reasons.

Betting on the growth of e-commerce

What Shopify lacks in diversification, it makes up for in growth potential. The company is a leader in e-commerce through its platform that helps merchants create online storefronts. Shopify's services are adapted to modern commerce. Merchants can not only customize their online stores thanks to the thousands of apps Shopify offers, but they can also market and sell their products across social media channels. Shopify is seeing tremendous success, with rapidly growing gross merchandise volume and revenue.

The company's free cash flow and margins have also been healthy in recent quarters. Further, there is significant growth potential ahead for the e-commerce specialist. The industry is projected to grow rapidly for the foreseeable future and beyond, thanks to the convenience it offers both consumers and merchants.

Meanwhile, Shopify has built a moat thanks to network effects and its app store's switching costs. Though the company isn't yet profitable, the lead it has in its corner of the e-commerce industry, coupled with its growth opportunities, make it a top stock to buy and hold as a core holding of your portfolio.

Add passive income with this dividend play

AbbVie is a pharmaceutical leader. The company sells drugs, a class of products that remains in high demand regardless of economic conditions. The company's immunology lineup appears particularly strong, thanks to products such as Skyrizi and Rinvoq. These two drugs have been growing their sales at a good clip since they first earned approval in 2019.

So, they haven't even been on the market for that long, yet management predicts they will reach combined sales of $31 billion by 2027, which is $4 billion higher than previous projections. Skyrizi and Rinvoq should help AbbVie drive solid top-line growth well into the 2030s.

The company's portfolio features many other medicines that are helping move the needle. Furthermore, AbbVie has a robust pipeline that should enable it to overcome patent cliffs over the long term. It lost patent exclusivity for Humira, its top-selling medicine, in 2023, but was able to return to top-line growth the following year, an impressive achievement.

Lastly, AbbVie is a terrific dividend stock, offering a forward yield of 3.2%. The company is a Dividend King, boasting 53 consecutive years of payout increases. AbbVie is a reliable, income-paying stock to start your portfolio with today.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,657!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,993!*

Now, it’s worth noting Stock Advisor’s total average return is 1,057% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Prosper Junior Bakiny has positions in Berkshire Hathaway and Shopify. The Motley Fool has positions in and recommends AbbVie, Berkshire Hathaway, and Shopify. The Motley Fool has a disclosure policy.

Key Points

• Viking Therapeutics' shares recently plunged, but digging deeper reveals that the sell-off might have gone too far.

• Regeneron Pharmaceuticals is showing resilience as its top line returns to growth amid stiff competition.

• 10 stocks we like better than Viking Therapeutics ›

Viking Therapeutics (NASDAQ: VKTX) and Regeneron Pharmaceuticals (NASDAQ: REGN) have faced challenges this year that have sunk their stock prices. The former is down by 37% this year, while the latter has declined 17%.

Could this be an excellent opportunity for investors to scoop up shares of these companies on the dip? That's the case if they're likely to rebound. And some Wall Street analysts think that could be in the cards. Viking's average price target of $88.78 implies an upside of 245% from its current levels, while Regeneron's $716.18 implies it could jump by 21%.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Let's see whether Viking and Regeneron really could deliver solid returns in the next year or so.

Image source: Getty Images.

1. Viking Therapeutics

Viking Therapeutics is in the news, and not for the right reasons. The company's shares recently fell off a cliff after it released disappointing -- by the market's standards -- phase 2 results for its oral GLP-1 weight loss candidate, VK2735. Investors, in particular, focused on safety data. According to Viking, 20% of the study's participants taking VK2735 dropped out due to adverse side effects, the most common of which were gastrointestinal (GI) issues, compared to just 13% in the placebo group.

However, Wall Street analysts remain bullish on the stock even after this setback, with several reiterating their buy ratings. What gives? I'm inclined to agree that the market's reaction to Viking Therapeutics' phase 2 data for oral VK2735 was excessive. As management pointed out, 98% of adverse events in the trial were mild to moderate; 99% of GI-related ones also were either mild or moderate.

Meanwhile, the medicine resulted in an average weight loss of 12.2% at the highest dose after 13 weeks, with no weight-loss plateau observed. Management shared in a separate call with analysts that even more weight was lost at 16 weeks.

By comparison, Eli Lilly's oral GLP-1 candidate, orforglipron, posted a mean weight loss of 12.4% at the highest dose in a phase 3 study -- but that was over a 72-week period. Oral VK2735 appears exceptional in comparison, as it achieved pretty much the same result in less than a quarter of the time. Safety might be a concern, but there are ways to mitigate it. The highest dose of the medicine had the most adverse effects; other doses had fewer, with still-reasonable efficacy.

It's also important to look at the rest of Viking Therapeutics' pipeline. The company's subcutaneous version of VK2735 is currently in phase 3 studies, and based on data from phase 2, it looks promising. Viking has other candidates it's working on, including an investigational therapy for metabolic dysfunction-associated steatohepatitis (MASH), VK2809; it should advance this medicine to phase 3 studies soon.

Viking's recent setback underscores the risks associated with investing in clinical-stage biotech stocks. The company is somewhat risky. I also don't expect the stock to soar by 245% in the next 12 months.

However, the data from the phase 2 study for oral VK2735 wasn't as bad as the stock's meltdown might have you believe, and Viking Therapeutics has other exciting candidates. In my opinion, now is an ideal entry point for risk-tolerant investors.

2. Regeneron Pharmaceuticals

Regeneron has been facing competition, including biosimilars, for Eylea, a medication used to treat wet age-related macular degeneration. However, the company's more recently approved (and still patent-protected) high-dose (HD) formulation of the medicine is helping to smooth out the losses somewhat.

That, combined with Regeneron's most significant growth driver, eczema treatment Dupixent, which continues to perform exceptionally well, helped the company grow its top line in the second quarter. Revenue increased by 4% year over year to $3.68 billion. Worldwide sales for Dupixent recorded by Sanofi -- with which Regeneron shares the rights to the medicine -- increased by 22% year over year to $4.34 billion.

Regeneron should earn label expansions for Eylea HD in the U.S., including in treating macular edema. The company has also recently earned approval for Lynozyfic, a new cancer medicine.

Its robust pipeline should yield additional regulatory wins over the next couple of years. The company is working on trevogrumab, a medicine that could address muscle loss in patients taking famous GLP-1 weight management medicines like semaglutide (the active ingredient in Wegovy). Trevogrumab showed encouraging results in this regard in a phase 2 study.

Additionally, Regeneron has other candidates, including a gene therapy for one type of genetic deafness.

Regeneron Pharmaceuticals is demonstrating its ability to cope with competition for one of its former main growth drivers, yet the stock continues to decline. The company might not meet Wall Street's price target in the next year, but it could deliver superior returns to patient investors over the long run.

Should you invest $1,000 in Viking Therapeutics right now?

Before you buy stock in Viking Therapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Viking Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,657!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,993!*

Now, it’s worth noting Stock Advisor’s total average return is 1,057% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Prosper Junior Bakiny has positions in Eli Lilly and Viking Therapeutics. The Motley Fool has positions in and recommends Regeneron Pharmaceuticals. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.

Key Points

• Despite strong financial results, a recent clinical setback led to a decline in the stock.

• The company's valuation might continue to be an issue in the near term.

• However, the drugmaker has excellent long-term prospects.

• 10 stocks we like better than Eli Lilly ›

Eli Lilly (NYSE: LLY) has been a terrific stock to own over the past 15 years; it has consistently outperformed the broader equities market. However, the drugmaker may not be able to pull that off in 2025, because several setbacks this year have sunk its stock price. As of this writing, its shares are down 9% year to date, while the S&P 500 is up 9%.

Lilly is on track for its worst annual performance in a long time, but does that mean investors should steer clear of the stock? Let's find out.

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Valuation matters

In the second quarter, Eli Lilly once again posted financial results that made it the envy of its similarly sized peers. Revenue increased by 38% year over year to $15.6 billion, while adjusted earnings per share came in at $6.31, 61% higher than the year-ago period. Yet the company's shares fell. What gives?

Those strong results were already somewhat baked into the stock price. Even after its post-earnings dip, Lilly was recently trading at 30.6 times forward earnings, much higher than the 16.4 average for the healthcare industry. At these levels, it's hard to impress the market, whether with robust but expected financial results or with clinical progress.

Image source: Getty Images.

The main reason Eli Lilly's shares dipped significantly after the earnings announcement is that the company also released other news on the same day. It posted data showing that its oral GLP-1 candidate, orforglipron, led to an average weight loss of 12.4% in a phase 3 study.

The race for oral GLP-1 drugs is heating up. This market is important because many patients prefer oral formulations of their medications, while pills are also cheaper for pharmaceutical companies to manufacture and store. However, orforglipron's phase 3 data was not quite up to the market's expectations, leading to the sell-off.

Lilly's shares also dropped significantly after its first-quarter earnings because of poor bottom-line guidance for the rest of 2025. Given the healthcare leader's rich valuation metrics, the market expects excellent execution across the board, whether in financial results or clinical and regulatory progress. But the company has had several missteps this year on those fronts, at least by its lofty standards, and that's why it hasn't performed well this year. Is it time to give up on the stock?

Where does Eli Lilly go from here?

Can Lilly recover? In my view, despite the recent setbacks, its prospects remain attractive. True, there could be more volatility for the stock in the near term, considering that it's trading at a premium compared to its similarly sized peers. However, it's worth noting that Lilly has earned this premium by consistently posting incredibly strong financial results and making significant breakthroughs in the market for GLP-1 drugs, as well as in other areas.

Eli Lilly's best-selling drug is tirzepatide, sold under the brand names Mounjaro for diabetes and Zepbound for obesity. Combined, they generated over $8 billion in sales in the second quarter, and over $14 billion through the first six months of the year -- and this for a compound that was approved only three years ago. It's an incredibly rare feat for a medicine to reach these levels of sales quickly -- or at all.

However, it should maintain that momentum. According to some projections, Mounjaro and Zepbound could combine for nearly $62 billion in sales by 2030, making Eli Lilly the world's leading pharmaceutical company by revenue in the process.

Meanwhile, Eli Lilly has other exciting products in its lineup that are already blockbusters, or should join those ranks down the line. Cancer medicine Verzenio posted $1.3 billion in sales in the second quarter, up 12% year over year. Newer products, including Ebglyss for eczema, should eventually contribute too.

Lilly's pipeline is strong, especially in its core areas of diabetes and obesity. Orforglipron could still be a hit. Retatrutide, a GLP-1 medicine with a novel mechanism of action -- it mimics the action of three gut hormones, versus two for tirzepatide -- also looks promising.

Clinical setbacks happen to every drugmaker. However, Lilly's extensive pipeline and expertise in developing therapies in specific areas make it likely to secure some important clinical and regulatory wins in the next few years. And the company should continue posting excellent financial results in the meantime.

Finally, Eli Lilly is a solid dividend stock. All of these factors make it look like a buy, at least for investors who are in it for the long haul.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Eli Lilly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $650,499!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,072,543!*

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*Stock Advisor returns as of August 18, 2025

Prosper Junior Bakiny has positions in Eli Lilly. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Points

• Eli Lilly is investing money to help a smaller biotech develop a new class of small-molecule drugs.

• This move is another in a long list of deals it has made recently to strengthen its operations.

• Lilly's commitment to improving its already strong business makes the stock attractive.

• 10 stocks we like better than Eli Lilly ›

Success often breeds success. Highly profitable companies have more capital to reinvest in the business and pursue high-growth opportunities.

Take Eli Lilly (NYSE: LLY), a pharmaceutical giant that has been performing well in recent years. The drugmaker is not resting on its laurels. Lilly has been signing deals and looking for the next big thing. It recently penned an agreement worth nearly $1 billion in another promising potential avenue. Let's find out what that is and whether it makes the company's shares more attractive.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Looking for a new class of drugs

On July 24, Gate Biosciences, a privately held biotech, announced it had signed an agreement with Eli Lilly to co-develop a potential new class of drugs called "Molecular Gates." Gate Biosciences received an up-front payment of an undisclosed amount and will be eligible for milestone payments and potential future royalties, in a deal valued at about $856 million, which also includes an equity investment for Gate.

Image source: Getty Images.

Eli Lilly appears to be interested in Gate's approach, which could revolutionize the way we treat many diseases by targeting "difficult to drug" proteins.

Here's the basic idea: Many therapies work by modifying, inhibiting, or otherwise disrupting the proteins that play a role in the diseases they treat. However, some proteins involved in certain conditions have characteristics that make them hard to target with the traditional approaches -- these are what Gate Biosciences calls difficult-to-drug proteins.

The biotech is developing a novel mechanism that could help target even these proteins and unlock potential therapies for many conditions that are currently untreated or undertreated.

Focusing on the bigger picture

Any company that can create a new class of drugs and target otherwise difficult-to-treat diseases could make a fortune. However, Gate Biosciences, founded in 2021, is still in the early stages of this project. It will take many years before we see the results of its efforts, and they might not be positive.

So this approach is still somewhat speculative for now. Eli Lilly knows that, although the pharmaceutical company probably sees some promise in Gate's work. Even so, this investment won't move the needle anytime soon for Lilly, but there is an even more important point to focus on.

The company has achieved considerable success in recent years, generating rapidly growing revenue and earnings. Its core therapeutic areas continue to perform well, with sales of products such as Mounjaro for diabetes and Zepbound for obesity moving in the right direction.

But management is not satisfied. That's why it has made a series of moves recently, including acquisitions and licensing agreements. In July, it closed its buyout of Verve Therapeutics, a smaller biotech working on medicines for cardiovascular diseases.

In May, it announced it would acquire SiteOne Therapeutics, a drugmaker with a promising investigational medicine for pain. In January, it grew its oncology pipeline through the acquisition of a candidate called STX-478 from the privately held biotech Scorpion Therapeutics.

These moves and others show that Eli Lilly is thinking years ahead, a sign of good management. By themselves, none of these licensing deals or acquisitions make the stock a buy. There are better reasons to consider it.

The company remains a top player in diabetes and is emerging as the leader in the burgeoning market for weight management, all while growing its revenue significantly faster than its similarly sized peers. It also has a deep lineup that includes such promising programs as orforglipron, a potential oral weight-loss medicine, and retatrutide, which mimics the action of three gut hormones and could prove more effective than current leading anti-obesity drugs.

Newer medicines and pipeline candidates in other areas -- including immunology, oncology, and Alzheimer's disease -- strengthen the company's business. And it pays a regular dividend that has more than doubled over the past five years.

All this makes the stock attractive. However, Eli Lilly's commitment to continually seeking out the next big thing and planning for patent cliffs well in advance are even better reasons to buy.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Eli Lilly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,108,033!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 181% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of August 4, 2025

Prosper Junior Bakiny has positions in Eli Lilly. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Points

• Medtronic is separating out its lower-margin diabetes care segment.

• It's also pouncing on a massive opportunity in robotic-assisted surgery.

• The healthcare leader has a terrific dividend-growth track record.

• 10 stocks we like better than Medtronic ›

Medical device specialist Medtronic (NYSE: MDT) has not been the best of investments over the past five years. The stock has significantly lagged the market over this period, thanks to weak business fundamentals, including slow revenue growth. The healthcare giant now faces additional obstacles, such as the threat of steeper tariffs due to President Donald Trump's aggressive trade policies.

Even amid all that, Medtronic has plenty of redeeming qualities and could still be a solid investment for long-term investors. Here are three reasons why.

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1. Medtronic is spinning off its diabetes care unit

Medtronic recently announced that it will be spinning off its diabetes care unit, which will become a stand-alone, publicly traded company. Although sales of diabetes products have been growing faster than the rest of Medtronic's business, they have also been a drag on margins. During the company's fiscal year 2025, which ended on April 25, diabetes care accounted for 8% of revenue but only 4% of operating profits. Medtronic's other segments are not growing their sales as quickly, but they have more profitable margins.

In an environment where the company may face higher manufacturing costs due to tariffs, management has chosen to focus on higher-margin opportunities. Diabetes care was also the healthcare specialist's only consumer-facing business; the others offer products to healthcare providers. The move could help Medtronic navigate the macroeconomic landscape better if Trump's tariffs remain in place. That's especially the case if the company can find other lucrative revenue growth opportunities.

Image source: Getty Images.

2. A significant opportunity in robotic-assisted surgery

Medtronic has been developing its robotic-assisted surgery (RAS) system, Hugo, for years. It has been in use in other countries, though it's yet to get the regulatory nod in the United States. The medical device specialist decided to pursue this opportunity because the RAS market is severely underpenetrated. Intuitive Surgical's da Vinci system dominates the field and faces little competition for the range of procedures for which it's approved.

Yet a couple of years ago, Medtronic pointed out that of all the procedures that could be performed robotically, fewer than 5% were. And over the long run, the demand for these kinds of surgeries will increase along with the world's aging population, since seniors are far more likely to face health issues that call for these kinds of interventions. The good news is that Medtronic's Hugo system recently completed clinical trials in the U.S. for urologic procedures. The company has requested clearance from the U.S. Food and Drug Administration for that indication.

It should be the first of many. The Hugo system could eventually become a crucial part of Medtronic's growth strategy and help improve its financial results over the long term, given the significant white space available in the industry.

3. A soon-to-be Dividend King

Despite Medtronic's recent challenges, the company has continued to pay and raise its dividends. In fact, the company has raised dividends for 48 consecutive years. Most businesses don't survive nearly five decades, let alone pay dividends for that long. Medtronic's ability to do so speaks volumes about its underlying business. It's a well-established leader in its niche of the healthcare market, with significant footprint in the industry and a long and successful history of navigating this deeply regulated sector.

All of those factors make Medtronic an excellent pick for income-seeking investors. It should continue rewarding shareholders with payout increases for a long time -- and in two years, it should become a Dividend King.

Medtronic may not be one of the most exciting artificial intelligence (AI) leaders capturing Wall Street's attention, although the company is implementing AI across its business in ways that could pay off in the long run. Regardless, its recent moves in shedding its diabetes care segment and seeking clearance for its Hugo system, along with its consistent dividend streak, make Medtronic a reliable company to invest in for the long haul.

Should you invest $1,000 in Medtronic right now?

Before you buy stock in Medtronic, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medtronic wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,064,820!*

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*Stock Advisor returns as of July 29, 2025

Prosper Junior Bakiny has positions in Intuitive Surgical. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.

Key Points

• President Trump's tariffs could erode healthcare companies' profits, but some may perform well regardless.

• Eli Lilly and Novartis have taken steps to mitigate the potential impact.

• Both drugmakers are innovative, deliver strong financial results, and have excellent dividends.

• 10 stocks we like better than Eli Lilly ›

President Donald Trump's trade policies have caused tumult on Wall Street. The president has pushed for aggressive tariffs on imported goods in an attempt to bring manufacturing jobs back to the country.

Although there were hopes that certain sectors would be spared -- including healthcare -- it turns out that won't be the case. Higher duties on imports could increase companies' costs, which would squeeze their margins and bottom lines, and meaningfully hurt their stock performance. However, even with this threat, there are still some healthcare companies worth investing in, including Eli Lilly (NYSE: LLY) and Novartis (NYSE: NVS).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

1. Eli Lilly

Eli Lilly has been expanding its U.S.-based manufacturing capacity for years, but it has recently accelerated this effort. The pharmaceutical leader has now invested, or committed to invest, $50 billion to build or update manufacturing sites in the country since 2020, about half of which it announced during the first quarter.

According to management, once it completes its ongoing projects, it will be able to manufacture 100% of medicines aimed at U.S. patients within the country while also increasing its exports. In other words, the drugmaker will be mostly insulated from the impact of Trump's tariffs.

And there are other reasons to invest in Eli Lilly. Here are three:

First, the company has demonstrated remarkable innovation in its core areas of diabetes and obesity in recent years. Its newer launches, Mounjaro and Zepbound, are already generating billions and allowing it to grow its revenue and earnings at a good rate.

In the first quarter, its top line rose 45% year over year to $12.7 billion. Net income was $2.8 billion, 23% higher than the year-ago period. Results like these should be the norm in the next five years at least.

Second, the company has an extensive pipeline. Lilly recently reported positive phase 3 results for an oral GLP-1 candidate, orforglipron. This was an important win for the company since its current GLP-1 medicines are administered subcutaneously, so orforglipron could attract some patients who want a more convenient option. And there are many other exciting candidates, even beyond diabetes and obesity care.

Third, the company is an excellent dividend stock, despite its unimpressive forward yield of 0.8%. It has increased its payout by 102.7% in the past five years. But whether you seek growth or income, Eli Lilly is a top stock to buy now and hold for a long time, despite the threat of tariffs.

2. Novartis

Novartis is following a similar blueprint to mitigate the impact of tariffs. The company announced it would invest $23 billion in the next five years to improve its U.S.-based manufacturing footprint.

Although its results may suffer somewhat from the impact of tariffs in the meantime, the company should eventually be able to handle them, assuming the tariffs continue. It's another excellent healthcare stock to consider in this environment, particularly given its strong financial results and promising prospects.

In the first quarter, net sales increased by 12% to $13.2 billion year over year. Net income was $4.5 billion, 22% higher than the year-ago period.

Some might point out that Novartis is losing U.S. patent exclusivity for its heart failure medicine Entresto this year. In the first quarter, it was still its top-selling drug, generating $2.3 billion in sales, 20% higher than the prior-year quarter.

This will be a significant loss, but management has prepared for it. Newer medicines should eventually replace Entresto, including Fabhalta, which treats paroxysmal nocturnal hemoglobinuria (a rare blood disease), and cancer drugs Scemblix and Pluvicto.

All of them first earned approval in the U.S. between 2021 and 2023. In the first quarter, Pluvicto, the best-selling of the trio, generated revenue of $371 million, a 20% year-over-year increase. Furthermore, Novartis' deep pipeline will lead to even more launches. The company currently has over 100 ongoing programs.

Lastly, Novartis is also a strong income stock. The drugmaker has increased its dividend for 28 consecutive years and currently offers a forward yield of 3.3%, significantly higher than the S&P 500's average yield of 1.3%.

It should deliver solid returns for patient investors, despite an upcoming major patent cliff and potential impacts from tariffs.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Eli Lilly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Prosper Junior Bakiny has positions in Eli Lilly. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Points

• Merck is seeking ways to prepare for a significant upcoming patent cliff.

• The company has just announced another acquisition that will help it achieve that goal.

• With its newer products, strong dividend, and reasonable valuation, Merck still looks attractive.

• 10 stocks we like better than Merck ›

Merck (NYSE: MRK), a leading pharmaceutical company, generates consistent revenue and profits. However, the stock has been under pressure over the past year due to its reliance on Keytruda, its famous cancer medicine. It might be the best-selling drug in the world, but Keytruda will experience a patent cliff by the end of the decade -- a significant risk investors have to take into consideration.

Merck has been looking for ways to mitigate the risk of competition, and the drugmaker just made a move that could help along those lines. Should investors consider buying the stock?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Merck dishes $10 billion to expand its lineup

On July 9, Merck announced that it would acquire Verona Pharma, a U.K.-based biotechnology company specializing in the development of medicines for respiratory diseases. Merck will pay $10 billion in cash for this transaction, allowing it to add Ohtuvayre -- which treats chronic obstructive pulmonary disease (COPD) -- to its portfolio.

First approved by the U.S. Food and Drug Administration (FDA) last year, Ohtuvayre is a treatment for COPD that looks highly promising. It has so far had a successful launch, and it is still being investigated across other conditions, which could later lead to label expansions.

Though estimates vary (as always), some analysts think Ohtuvayre sales could peak at around $4 billion. So, it seems the company has yet another blockbuster on its hands. But will that be enough to replace Keytruda?

Merck's multipronged approach

Merck has entered into several such agreements in recent years. In 2021, it acquired Acceleron Pharma for $11.5 billion. This deal eventually allowed it to launch Winrevair, a medicine for pulmonary arterial tension. Winrevair is yet another promising therapy, with projected peak sales at around $3 billion.

Between Ohtuvayre and Winrevair, that's at most $7 billion in peak annual revenue, though, much lower than the $29.5 billion in sales Keytruda generated last year. Merck will need far more than that, but the company does have a plan.

Some of its acquisitions have yet to yield approved products with blockbuster potential. In 2023, the company paid $10.8 billion for Prometheus Biosciences and its promising candidate for ulcerative colitis, MK-7240. That could be another great addition to the company's portfolio, provided it aces enough clinical trials to land regulatory approval from the FDA.

Merck isn't just relying on buyouts to plan for its post-Keytruda life, though. One of the company's most important internally developed projects is a subcutaneous (SC) version of its crown jewel. SC Keytruda recently aced a phase 3 clinical trial in which it proved noninferiority compared to the original, intravenous version of the medicine in treating patients with non-small cell lung cancer, one of Keytruda's most important markets.

The newer version of the cancer therapy does have some advantages over the old, though, including significantly cutting the time patients spend in the treatment room and the time physicians spend preparing the therapy, administering it, and monitoring patients afterward.

SC Keytruda should attract plenty of business across many of the original's indications once all is said and done. And, together with the newer therapies Merck now has under its banner, should allow the company to smooth out the losses once biosimilar competition for Keytruda enters the market.

The stock could perform well post-Keytruda

Merck currently has more than 80 programs across its phase 2 and phase 3 pipeline. So, even beyond the candidates mentioned, the company should be able to find new gems.

Putting aside label expansions for existing medicines, even a 25% success rate on brand-new clinical compounds should translate to several novel launches over the next five years. Not all will be blockbusters, but Merck's deep pipeline and recent moves show that it is capable of moving beyond Keytruda.

Additionally, there are other reasons to consider buying the stock. First, Merck's shares look incredibly cheap right now. The company is trading at 9.3 times forward earnings estimates. The average for the healthcare sector is 16.2.

Second, Merck is a solid dividend stock. The company's forward yield sits around 4%, and it has increased its payouts by 88.8% in the past decade.

Merck's shares have lagged the market over the past year, but the company's prospects are still strong, at least for those willing to hold onto the stock for a while.

Should you invest $1,000 in Merck right now?

Before you buy stock in Merck, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Merck wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck. The Motley Fool has a disclosure policy.

Key Points

• DexCom has barely scratched the surface of its niche in the diabetes market.

• As a result of industry challenges, the stock's valuation has now come down.

• But from here, the stock looks well-positioned to deliver excellent results.

• 10 stocks we like better than DexCom ›

Medical device specialist DexCom (NASDAQ: DXCM) has encountered significant headwinds in the past year. The company's financial results haven't been quite up to the market's standards, and broader market volatility caused by President Donald Trump's trade policies isn't helping either. The stock is down 26% over the trailing-12-month period.

Yet even with all these challenges, DexCom could be a terrific performer in the next five years. Here's why.

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There's plenty of white space ahead

DexCom markets continuous glucose monitoring (CGM) systems, which are devices that help track blood sugar levels in patients with diabetes. CGMs have at least two advantages: They make measurements automatically, and they make them as often as every five minutes. Consistently monitoring blood glucose levels helps people with diabetes make better health decisions. That's why CGM devices lead to improved outcomes, including less time spent in hyperglycemia.

Image source: Getty Images.

DexCom has significantly increased its installed base over the years. In 2024, it had over 2.5 million customers worldwide. However, the company remains well-positioned to capitalize on a massive global opportunity.

In the U.S., DexCom estimates that there are more than 4.5 million diabetes patients on insulin therapy who aren't on CGM yet despite being eligible for third-party coverage for the technology. And that's just the U.S., one of the more advanced countries in terms of CGM penetration. DexCom has typically targeted patients who use insulin, and third-party payers have been more willing to cover these populations.

However, last year, it launched Stelo, an over-the-counter CGM option for diabetes patients who aren't on insulin and for people with prediabetes. This move significantly expanded the company's addressable market. CGM penetration in the U.S. for type 2 diabetes patients not on insulin is about 5%, and for prediabetes patients less than 1%.

DexCom's opportunities both within and outside the U.S. are massive. The increased adoption of CGM technology has helped its revenue and earnings grow steadily over the past decade, and this trend is likely to continue.

DXCM Revenue (Annual) data by YCharts.

DexCom's shares declined last year due to poor financial results; in the U.S., more patients than the company expected took advantage of rebates, leading to lower-than-expected revenue per customer. However, since there's still plenty of work to be done in the CGM market, DexCom can address that issue as it continues to make even more headway in this field. That will allow its financial results to improve.

Are DexCom's shares too expensive?

The stock's forward price-to-earnings ratio was recently 41.5, much higher than the healthcare sector's average of 15.8. But that forward P/E is on the low end compared to DexCom's average over the past few years:

DXCM PE Ratio (Forward) data by YCharts.

The medical device specialist has historically had steep valuation metrics, but has delivered market-beating returns anyway. In my view, DexCom can do the same in the next five to 10 years.

Investors might also be concerned about DexCom's main competitor in the CGM market, Abbott Laboratories. But these rivals have battled it out for years, and there's more than enough space for both to be successful, given the large worldwide CGM opportunity.

Furthermore, DexCom benefits from a network effect, as multiple companies have developed devices for diabetes patients that are compatible with its technology; these include insulin pens and pumps, third-party apps, and the Apple Watch. The more DexCom's installed base increases, the more attractive its ecosystem becomes to device or app developers looking to target a large population of patients.

And as these companies launch more technologies compatible with DexCom's CGM devices, they also become more appealing to patients. This dynamic makes it likely that DexCom will remain a leader in CGM well beyond the next five years. In the meantime, the stock could rebound from its poor performance last year, and deliver superior returns through the end of the decade.

Should you invest $1,000 in DexCom right now?

Before you buy stock in DexCom, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and DexCom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories and Apple. The Motley Fool recommends DexCom and recommends the following options: long January 2027 $65 calls on DexCom and short January 2027 $75 calls on DexCom. The Motley Fool has a disclosure policy.

Key Points

• Exelixis' most important product should continue driving strong financial results through the end of the decade.

• The oncology specialist is working on a next-gen medicine that could be even better than its crown jewel.

• The midcap biotech looks well-positioned to deliver market-beating returns over the long run.

• 10 stocks we like better than Exelixis ›

A decade ago, shares of Exelixis (NASDAQ: EXEL), a biotech company specializing in oncology, were trading for under $10 per share. Today, the drugmaker's shares are changing hands for about $45 apiece. In other words, Exelixis has crushed the market since 2015.

Some might think there is little upside left for the stock after this run, but that's not the case. Read on to find out why Exelixis still has plenty of growth fuel left in the tank.

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EXEL Total Return Level data by YCharts.

Cabometyx is still doing the heavy lifting

Exelixis is best known for its cancer medicine, Cabometyx. First approved in the U.S. in 2016 for patients with renal cell carcinoma (RCC, a form of kidney cancer), it was a bit of a breakthrough as the first therapy to show significant improvements for RCC patients in three important measures: overall survival, progression-free survival, and objective response rate (the percentage of patients who respond to treatment).

Cabometyx has since earned numerous label expansions, and it continues to help drive solid top- and bottom-line growth for Exelixis. In the first quarter, the company's revenue jumped by 30.6% year over year to $555.4 million. The company's adjusted earnings per share (EPS) more than tripled to $0.62.

Image source: Getty Images.

Cabometyx has proven to be a successful pipeline drug, becoming the most prescribed tyrosine kinase inhibitor (a type of cancer drug that targets and kills cancer cells) among RCC patients, while making headway in hepatocellular carcinoma (liver cancer) and other markets.

Despite Cabometyx's success, though, Exelixis will need more to continue delivering above-average returns over the long run. Generic competition for the medicine is expected to enter the U.S. market by 2030. Thankfully, Exelixis is already preparing for that eventuality.

The next stage of growth

Exelixis aims to apply the same blueprint that has made it successful over the past decade: developing a cancer medicine that can become a standard of care in a niche with a high unmet need, while earning label expansions in many other markets. The company appears to have already discovered its next gem. Exelixis recently reported positive top-line phase 3 results for zanzalintinib in patients with metastatic colorectal cancer (CRC).

Despite having a high 5-year survival rate when caught early, CRC is the second-leading cause of cancer death worldwide partly because, once it has metastasized, there are few effective treatment options.

Exelixis is looking to change that with zanzalintinib, and the company's apparent phase 3 success suggests it might be able to pull it off. Furthermore, zanzalintinib is being investigated across other indications, including those where Cabometyx is dominant, such as RCC. The former seems to have a better safety profile than its predecessor, among several other advantages.

Beyond RCC and CRC, Exelixis plans to start several other late-stage studies for its next crown jewel this year, all of which will test it against current standards of care.

As they say, to be the best, you have to beat the best. That's what Exelixis aims to do with zanzalintinib. Exelixis expects zanzalintinib to generate about $5 billion in sales eventually, far exceeding Cabometyx's current total or, for that matter, Exelixis' annual revenue. There is still some work to be done to get there, but early signs suggest that zanzalintinib is an excellent candidate.

Exelixis' recent clinical progress also reinforces its leadership in oncology. The biotech company has several other early-stage candidates in development that could help it move beyond Cabometyx once it starts facing generic competition.

Can Exelixis get to $200?

From its current stock price of approximately $45, Exelixis needs a compound annual growth rate (CAGR) of at least 16.1% to reach $200 within the next decade and 10.5% to achieve this in 15 years. The former goal is ambitious, but the stock has delivered even better returns than that over the past decade. Although the past is no guarantee of future success, Exelixis' MO has remained the same and could, once again, allow it to generate monster returns over the long run as it makes significant clinical and regulatory progress with zanzalintinib and other pipeline candidates.

Even if it falls short of this goal, though, my view is that Exelixis is well-positioned to deliver market-beating returns to patient investors -- the 15-year path to $200 would still be impressive. Either way, the stock looks like a buy.

Should you invest $1,000 in Exelixis right now?

Before you buy stock in Exelixis, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Exelixis wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

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Prosper Junior Bakiny has positions in Exelixis. The Motley Fool has positions in and recommends Exelixis. The Motley Fool has a disclosure policy.

Key Points

• Microsoft is the second-largest company by market cap, behind Nvidia.

• The cloud computing leader is well positioned to be the next $4 trillion stock.

• Microsoft could continue to perform well long after it reaches $4 trillion.

• 10 stocks we like better than Microsoft ›

Nvidia (NASDAQ: NVDA) has been firing on all cylinders over the past two years, and the company just added one more accomplishment to its long list of medals: The chipmaker became the first stock to hit the $4 trillion mark. It now sits as the most valuable company in the world, but others are close behind.

Other corporations will eventually reach that valuation too, perhaps even sooner than many think. And the stock most likely to get to $4 trillion next is Microsoft (NASDAQ: MSFT). Read on to find out why.

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Why Microsoft has the clear edge

Most of the members of the "Magnificent Seven" have market caps above $1 trillion, but some are much closer to the $4 trillion mark than others. The two largest companies behind Nvidia are Apple, valued at $3.16 trillion, and Microsoft, at $3.72 trillion. The others are much further behind.

And while there's the possibility that they will soar while these two drop, assuming they all perform relatively similarly in the next few months, Microsoft will get there first simply because it's the closest.

However, Microsoft has an excellent chance of performing better than, at the very least, its closest competitor, Apple. The iPhone maker has been hit hard this year due to the current U.S. administration's trade policies. The Trump administration aims to bring manufacturing back to the United States, which poses a challenge for Apple, as the company outsources most of its manufacturing to countries such as China, a favorite target of Trump's aggressive tariffs, and other Asian nations.

Trump recently doubled down on his threat of aggressive tariffs. Additionally, Apple has fallen behind Microsoft and its tech peers in the artificial intelligence (AI) race. While I think Apple could still perform well over the long run, the company's short-term prospects don't look attractive.

What about Microsoft? The tech leader delivered excellent results during its latest update, which covered the third quarter of its fiscal year 2025, ending on March 31. Microsoft's cloud computing and AI businesses are booming. It has been gaining ground on Amazon in the competitive cloud field.

Further, the company's latest update provided strong guidance, indicating a growing demand for its services, despite a somewhat shaky macroeconomic environment. The smart money is on Microsoft outperforming Apple in the next few months.

Amazon, Alphabet, and Meta Platforms are also performing well, but with market caps of $2.36 trillion, $2.15 trillion, and $1.82 trillion, they are too far behind to make serious runs at the $4 trillion mark before Microsoft.

For all these reasons, Microsoft seems by far the most likely to join Nvidia in the $4 trillion single-company (for now) club next.

To $4 trillion and beyond

$4 trillion isn't a finish line. Once Microsoft reaches that point -- whenever that may be -- there will still be plenty of upside left for the company afterward. In fact, here is another prediction: Microsoft will reach a $10 trillion valuation within the next decade.

From its current levels, that would require a compound annual growth rate of at least 10.4%. That's no easy feat, but Microsoft can pull it off as the company continues to make headway within its two biggest sources of growth: AI and cloud computing.

While the company is already generating significant sales from these businesses, this is likely still the early stages of these industries' growth stories. According to Andy Jassy, CEO of Amazon, more than 85% of IT spending still occurs on-premises. Meanwhile, AI applications reached a new level a little less than three years ago with the launch of ChatGPT by OpenAI, a Microsoft-backed company. Both technologies enable businesses across all industries to reduce costs and increase efficiency.

Companies that don't use cloud computing or AI services might, eventually, become like modern businesses that don't use computers: They hardly exist. That could be the scale of the revolution investors are witnessing, and Microsoft is one of the leaders driving it. Though competition will continue to intensify, the tech giant has a strong competitive edge due to switching costs. Plus, it has already proven it can perform well despite competitive pressure from Alphabet and Amazon.

Microsoft's long-term prospects look attractive thanks to this duo of massive growth drivers. Investors shouldn't buy the stock because it could soon reach $4 trillion. They should purchase it because it will likely continue performing well long after that.

Should you invest $1,000 in Microsoft right now?

Before you buy stock in Microsoft, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of July 7, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Prosper Junior Bakiny has positions in Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Johnson & Johnson has delivered excellent returns to its long-term shareholders.

• One key factor behind the company's success is its ability to innovate.

• Despite various challenges, the drugmaker's strong business and dividend program make it attractive.

• 10 stocks we like better than Johnson & Johnson ›

Time is one of investors' greatest allies. With enough patience, even a relatively small sum of money invested in an excellent company can yield substantial returns, especially when dividends are reinvested.

Case in point: Shares of Johnson & Johnson (NYSE: JNJ), one of the world's largest healthcare companies, have increased by 4,720% over the past few decades. The stock may have garnered more headlines due to various legal challenges over the past few years, but it remains an excellent long-term option, especially for income seekers. Here's the rundown.

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JNJ Total Return Level data by YCharts.

The secret to Johnson & Johnson's success

Medical care is always in high demand: So long as we get sick, this is one sector that will never disappear. However, specific companies in the industry can cease to exist. One reason they do is their failure to innovate. Even if healthcare never sleeps, it does evolve, and it's critical for companies aiming to be successful over the long run to keep pace with that evolution. Johnson & Johnson has done that admirably over the years.

Consider its pharmaceutical segment. Last year, the drugmaker had more than 10 medicines that each generated over $1 billion in sales. In 2014, Johnson & Johnson also had more than 10 drugs that were blockbusters. Some of them were the same as last year's, but some weren't -- because the company has developed and marketed newer therapies over the past decade that have replaced older ones.

Image source: Getty Images.

In a decade, Johnson & Johnson's lineup of approved products will look different yet again. However, one thing won't change: It will still have many drugs that reach the $1 billion annual sales mark. J&J has more than 100 programs in its pipeline. True, many of those are for therapies seeking label expansions. But the company also has some brand-new clinical compounds, at least some of which will make it through the rigorous clinical-trial testing phases and go on to be massively successful.

And we haven't even mentioned Johnson & Johnson's medtech business, where it markets a range of medical devices across several major therapeutic areas. Its operations are well diversified in the healthcare sector. That, combined with the company's innovative qualities, makes it likely to remain a leader in healthcare for a long time.

Johnson & Johnson can overcome its challenges

Johnson & Johnson has encountered some headwinds in recent years. It's facing thousands of lawsuits from plaintiffs who allege that its talc-based products gave them cancer. The company has attempted to resolve these issues through various settlement proposals, but so far, to no avail. These legal battles are worth monitoring, but the stock is attractive despite them.

The company is not at serious risk of bankruptcy. That's why it still has an AAA credit rating, which is even higher than that of the U.S. government. Several judges have shot down its attempts to settle these lawsuits via a bankruptcy maneuver through a subsidiary, partly because of the company's underlying financial strength. While it's hard to know how this saga will end, my view is that Johnson & Johnson will continue performing well long after the dust settles.

Here's another potential challenge Johnson & Johnson faces: Some of its therapies will generate significantly less revenue in the next few years, due to either patent cliffs or Medicare price negotiations in the U.S. Here again, J&J can handle this threat. The company's innovative ability is the best way to overcome this problem.

The healthcare specialist can also count on its medtech unit to pick up some of the slack. One attractive opportunity in this segment is within the robotic-assisted surgery (RAS) niche. Johnson & Johnson is developing its Ottava RAS system, which should grant it plenty of long-term revenue opportunities and help it navigate patent cliffs.

Of course, we can't talk about J&J without mentioning its dividend. The company has increased its payouts for 62 consecutive years, which makes it a Dividend King. This streak highlights, once again, how strong Johnson & Johnson's business is -- most corporations don't even last six decades, let alone pay dividends for that long. The stock is an excellent pick for long-term, income-oriented investors.

Should you invest $1,000 in Johnson & Johnson right now?

Before you buy stock in Johnson & Johnson, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Johnson & Johnson wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 7, 2025

Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

Key Points

• Novo Nordisk's shares look attractive after a terrible performance over the past 12 months.

• DexCom has significant room to grow in its core market, despite disappointing results last year.

One of Warren Buffett's famous pieces of investing advice is to be greedy when others are fearful. One way to apply this wisdom is to look for companies that have lagged the market recently but still appear to be excellent long-term investment opportunities.

Two great examples today in the healthcare sector are Novo Nordisk (NYSE: NVO) and DexCom (NASDAQ: DXCM). Although these two corporations have encountered significant headwinds since last year, they could deliver market-beating returns to investors who initiate positions today and stick with them for at least a decade.

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1. Novo Nordisk

Novo Nordisk is coming off clinical setbacks and unimpressive financial results, at least by its lofty standards. The stock has significantly underperformed the market over the trailing-12-month period. But after this beating, the company's shares look attractive. Here are several reasons why.

First, although Novo Nordisk's eternal rival, Eli Lilly, appears to be taking the lead in the fast-growing weight management market, the former still has excellent prospects in this rapidly expanding therapeutic area.

Novo Nordisk's Wegovy continues to grow its sales at a good clip, and the company is awaiting approval from the U.S. Food and Drug Administration for an oral formulation of this popular medicine. Further, Novo Nordisk has promising internally developed pipeline candidates, such as amycretin, which recently entered phase 3 studies.

The Denmark-based drugmaker has also enhanced its pipeline in this area, thanks to licensing deals and acquisitions.

Second, Novo Nordisk has been working on diversifying its lineup and currently has promising pipeline candidates outside of its core treatment areas of diabetes and obesity. Novo Nordisk is developing medicines for conditions including hemophilia, Parkinson's disease, sickle cell disease, Alzheimer's disease, and others.

Third, after being southbound for the past 12 months, Novo Nordisk's shares look reasonably valued. The company's forward price-to-earnings ratio is 16.8, compared to the 16.3 average for the healthcare industry. Novo Nordisk's financial results over the past year have been terrific by industry standards, but not quite what the market expected. That may have justified the sell-off, but at current levels, the stock looks attractive.

Finally, Novo Nordisk is a solid dividend-paying company. It has increased its annual dividend per share by almost 284% over the past decade, while offering a forward yield of 2.3%. That's not exceptional, but it's above the S&P 500 index's average of 1.3%. Novo Nordisk is well-positioned to bounce back and deliver strong returns in the next decade as it rides weight management (and other) tailwinds.

2. DexCom

DexCom is a leading diabetes-focused medical device company. It develops continuous glucose monitoring (CGM) systems that help diabetics with constant blood sugar level measurements. DexCom has been successful thanks to the increased adoption of this innovative technology. Unlike blood glucose meters that are manually operated, use pesky and painful fingersticks, and can only tell a person's sugar level at one point in time, CGM devices are constantly monitoring things and automatically make measurements as often as every five minutes.

Rrevenue and earnings have grown rapidly over the past decade, but the company hit a speed bump last year when its top-line growth slowed considerably, partly due to higher-than-expected rebates in the U.S., resulting in lower revenue per patient. That said, these are short-term issues that do little to impact the company's long-term prospects. And on that front, there are still plenty of reasons to be excited about DexCom's future.

Consider that the company has ample room to grow, even in the U.S., a country that enjoys higher CGM penetration than most others. However, as DexCom has consistently pointed out, the population of patients who use CGM continues to lag behind those who are eligible for third-party coverage -- in other words, many people could obtain the technology paid for by insurers but have not yet opted in.

Further, there is a vast worldwide opportunity, since only a tiny percentage of the diabetics in the world use CGM technology. Though many are in countries where DexCom does not do business, the company has generally increased its addressable market by entering new geographies. In the next 10 years, expect the company to do the same while benefiting from greater insurance coverage for CGM -- third-party payers, including governments, have been more willing to foot the bill because of the technology's benefits.

All that should lead to consistent revenue and earnings growth for the medical device specialist. The stock has crushed the market in the past decade using this formula. In my view, it is well-positioned to do the same through 2035.

Should you invest $1,000 in Novo Nordisk right now?

Before you buy stock in Novo Nordisk, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Novo Nordisk wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of June 30, 2025

Prosper Junior Bakiny has positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends DexCom and Novo Nordisk and recommends the following options: long January 2027 $65 calls on DexCom and short January 2027 $75 calls on DexCom. The Motley Fool has a disclosure policy.

Key Points

• Healthcare giants AbbVie and Abbott Laboratories are both Dividend Kings.

• They should maintain their dividend growth habits for a long time to come.

• That's thanks to their solid businesses and promising product pipelines.

In 2013, AbbVie (NYSE: ABBV) became a publicly traded corporation after splitting from its former parent company, Abbott Laboratories (NYSE: ABT). Since then, both have produced strong returns and have been great picks for income-seeking investors, thanks to consistent payout hikes. That likely won't change soon.

These healthcare leaders should continue to perform well and reward shareholders with dividend increases for a long time. Read on to find out more.

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1. AbbVie

AbbVie is a pharmaceutical leader with a large portfolio of approved products, none more important than a duo of immunology medicines: Skyrizi and Rinvoq. In the first quarter, the company's revenue increased by 8.4% year over year to $13.3 billion, while its adjusted earnings per share came in at $2.46, 6.5% higher than the year-ago period. These results are all the more impressive considering AbbVie faced a major patent cliff just two years ago; however, it has since recovered, largely thanks to Skyrizi and Rinvoq.

The former generated $3.4 billion in sales during the period, representing a 70.5% year-over-year increase. Rinvoq's revenue came in at $1.7 billion, 57.2% higher than the year-ago period. Management predicts their combined annual sales will exceed $31 billion by 2027. Not only is that significantly higher than the $17.7 billion they racked up last year, it's also $4 billion higher than their previous guidance.

Skyrizi and Rinvoq are expected to drive top-line growth well into the 2030s. Although they will eventually lose patent protection, they demonstrate AbbVie's ability to navigate even the biggest patent cliffs, a quality that is essential for any pharmaceutical company to thrive over the long term. AbbVie has other products that help drive revenue growth, and, equally important, it has a deep pipeline that it routinely strengthens through acquisitions.

In March, the company announced a licensing deal with Denmark-based Gubra A/S for GUB014295, an investigational weight management therapy. AbbVie paid $350 million up front for this candidate, with potential milestones of $1.9 billion, not including royalties. AbbVie entered the fast-growing weight loss market with this move; GUB014295 might not pan out, but AbbVie's large pipeline, with approximately 90 products in development, should allow it to launch brand-new products frequently, navigate patent cliffs, and remain successful over the long run.

Now turning to the company's dividend, AbbVie has increased its payouts by 310% since 2013. And counting the time it spent under Abbott Laboratories' name, AbbVie is a Dividend King with 53 consecutive years of payout increases. These facts, from AbbVie's underlying business to the company's dividend track record, point to a company capable of sustaining a passive income program for a long time.

2. Abbott Laboratories

Abbott Laboratories is best known for its leadership in the medical device space, where it markets dozens of products across multiple therapeutic areas. The company also operates a diagnostic business and has a presence in the pharmaceutical and nutrition industries. Abbott Laboratories' operations are diversified, which can help it overcome challenges in specific segments. That's one of the company's strengths.

Here's another: Abbott Laboratories has been a leader in the highly regulated healthcare sector for decades. The company has built a solid reputation with physicians and consumers, all of whom are more likely to gravitate toward the brands they know and trust. In the medical device field, Abbott is a trusted brand. And thanks to its vast portfolio, it generates consistent revenue and earnings.

Abbott's biggest growth driver in recent years has been its diabetes care segment, led by its continuous glucose monitoring (CGM) franchise, the FreeStyle Libre. As the company noted, the FreeStyle Libre has become the most successful medical device in history in terms of dollar sales. That's no small feat. Yet there is still massive whitespace ahead, since only a small portion of the world's diabetics use CGM technology despite its advantages.

Abbott's work in this niche should provide a powerful long-term tailwind, but there will be many others. The company boasts other growth drivers, including its structural heart segment, where it markets a range of successful devices, such as its MitraClip device, a leader in its mitral valve repair niche. Beyond any single product, Abbott Laboratories has a proven track record as an innovator and should continue launching newer and better ones.

Lastly, Abbott is also a Dividend King, and over the past decade, it has increased its payouts by almost 146%. Abbott Laboratories' business is built to last. Investors who purchase the company's shares today can expect consistent dividend growth over the long term.

Should you invest $1,000 in AbbVie right now?

Before you buy stock in AbbVie, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AbbVie wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool has a disclosure policy.

Key Points

• Netflix and Roku are longtime streaming leaders with excellent prospects.

• Both companies should benefit as streaming viewing hours increase.

• They can deliver above-average returns over the next decade.

Streaming giants Netflix (NASDAQ: NFLX) and Roku (NASDAQ: ROKU) have a lot in common. The former was an early investor in the latter. They both dominate their respective niches in the streaming industry and have produced market-beating returns over the long term.

Here's one more thing Netflix and Roku have in common: excellent long-term prospects that could lead to substantial gains over the next decade. Here's the bull thesis for these market leaders.

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1. Netflix

Netflix has been firing on all cylinders thanks to its excellent financial results. In the first quarter, the company's revenue increased by 12.5% year over year to $10.5 billion. Netflix's earnings per share of $6.61 was up 25%, while its free cash flow came in at $2.7 billion, 24.5% higher than the year-ago period.

Image source: Getty Images.

Netflix is posting strong financials despite mounting competition in the streaming industry, which some thought would eventually erode its market share. But as evidence of the strength of its brand power, the company recently increased its prices once again. Netflix's ability to thrive even as new streaming services keep popping up says a lot about its prospects.

Streaming still has significant room to grow as the switch from cable continues. The company estimates a $650 billion revenue opportunity, which dwarfs its trailing-12-month revenue of $40.2 billion.

Over the next decade, it could make significant headway into this enormous, untapped potential. If Netflix can grab 10% of its total addressable market, its top line should grow at a good clip through 2035. The company's strategy to achieve that feat should remain the same: Create content that viewers love to watch and that spreads through word of mouth, leading to more paid subscribers on its platform, more data to help guide content production, and even better content.

A wonderful network effect has powered Netflix's success for a while now. There will be some challenges, including more competition and economic issues that might make people hesitant to put up with its price hikes, among others. However, Netflix has consistently demonstrated its ability to perform well despite these challenges, and I expect the company to continue doing so over the next decade.

The stock is still worth buying after the impressive run it has had over the past year. With $5,000, investors can afford three of the company's shares.

2. Roku

Roku's platform enables people to access most of the major streaming services, making the company's ecosystem an attractive hub for advertisers to target consumers. That's how Roku makes the lion's share of its revenue. Although it has encountered some headwinds in recent years -- including a slowdown in ad spending and declining average revenue per user (ARPU) -- Roku has somewhat recovered over the trailing-12-month period.

In the first quarter, the company's revenue increased by 16% year over year to approximately $1 billion. Roku's streaming hours were 35.8 billion, 5.1 billion more than the year-ago period. However, Roku remains unprofitable, although it is also making progress on the bottom line. The streaming leader's net loss per share in the period came in at $0.19, much better than the $0.35 reported in the prior-year quarter.

Although long-term investors may be concerned about the persistent red ink on the bottom line, recent developments show why Roku is a promising stock to hold onto. The company signed a partnership with Amazon, another leader in the connected TV (CTV) space. The two will grant advertisers access to their combined audiences, comprising 80 million households in the U.S. and more than 80% of the CTV market, through Amazon's demand-side ad platform.

This initiative will give advertisers far more bang for their buck, as early tests of the integration show. It also highlights the value of Roku's ecosystem, the leading one in the CTV space in North America. Over time, the company's platform will attract more advertising dollars, especially as streaming viewing time continues to increase. That's why investors should look past the red ink, for now. Roku's long-term prospects remain intact.

Even its ARPU decline in recent quarters was due to its focus on expanding its audience in certain international markets; it is still early in its monetization efforts in those regions. As Roku's initiatives in these places ramp up, while the company continues to make headway in more mature markets, Roku should eventually become profitable and deliver strong returns along the way.

The stock is worth investing in today for the next decade, and $5,000 is good for 56 shares of the company with some spare change.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Prosper Junior Bakiny has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Netflix, and Roku. The Motley Fool has a disclosure policy.

Key Points

• Investing in attractive dividend growth stocks can lead to superior long-term returns.

• The two healthcare companies below generally deliver excellent returns and dividend growth.

• Both have long-term tailwinds that can allow them to maintain solid performances over the long run.

For investors focused on the long game, there is little reason to sell -- at least, so long as a company generates solid returns through consistently improving financial results, regularly increases its dividend (if it pays one), and maintains strong growth prospects. Although it's sometimes difficult to find corporations that can do all that over long periods, stocks of this caliber do exist.

Consider the following two healthcare leaders: Zoetis (NYSE: ZTS) and Eli Lilly (NYSE: LLY). They have checked all of those boxes over the past decade, and there are good reasons to believe they can continue to do so for a very long time, making them excellent "forever" stocks. Read on to learn more about these companies.

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1. Zoetis

Zoetis is a leading animal health company with a diverse portfolio of products spanning various categories, including livestock, companion animals, and more. The company has 15 products that generate over $100 million in annual sales and consistently grows its revenue at a rate faster than most of its peers. Between 2014 and 2023, the company's top line increased at a compound annual growth rate of 8%, compared to the 5% the industry average.

The company has encountered some headwinds recently. Most notably, recent drug approvals by competitors could challenge the market share of one of Zoetis' most significant growth drivers, Apoquel, which helps treat allergic itch in dogs. Even so, Zoetis has dealt with competition for years and has still performed well. Although this issue may somewhat affect its results in the short term, the company's prospects look attractive for several reasons. First, Zoetis will continue to launch newer products.

It has proven itself to be an innovative leader in the animal health industry. Some of Zoetis' recent approvals, such as Solensia (first approved in 2022) and Librela (first approved in 2023) -- which treat osteoarthritis pain in cats and dogs, respectively -- are already helping drive sales growth. There will undoubtedly be plenty more such commercial launches in the future.

In the long run, Zoetis will benefit from the growth in the pet population, which has been ongoing for several decades in countries like the U.S., as well as other trends such as increased demand for protein sources due to human population growth, resulting in a greater need for products that help care for livestock. Zoetis can ride these tailwinds for a very long time.

Finally, the company offers a solid dividend program, despite a forward yield of just 1.3%, which is equal to the average yield for the S&P 500 index. Still, Zoetis' payouts have increased by an impressive 502% over the past decade. Yet its payout ratio of 31.6% remains conservative. There is ample space for more dividend hikes for Zoetis. Expect the company to offer consistent payouts and solid returns over the long run.

2. Eli Lilly

Eli Lilly has garnered significant attention in the past five years for its work in weight management, but the company has also quietly increased its dividends at a steady pace. The drugmaker's payouts have doubled over the past five years. That's not surprising. Eli Lilly's business seems to be firing on all cylinders. Revenue and earnings have been growing rapidly. The company's first-quarter top line jumped 45% year over year to $12.7 billion.

Most similarly sized pharmaceutical leaders would be thrilled to increase their revenue by a third of that percentage. That speaks volumes about Eli Lilly. And while its recent clinical and regulatory successes in the anti-obesity space are doing most of the heavy lifting, the company isn't a one-trick pony. Eli Lilly has blockbuster medicines in other areas, such as immunology -- with Taltz -- and oncology, thanks to Verzenio.

Even the company's pipeline is diversified across multiple therapeutic areas. It has recent approvals, too. Such products as Kisunla, which treats Alzheimer's disease, could eventually generate more than $1 billion in annual sales. Here's the point: Eli Lilly is an incredibly innovative company with a leadership position in diabetes and obesity, as well as significant footprints in other fields. The company is well positioned to develop new and improved products while generating above-average returns over the long term.

That's why dividend investors shouldn't be turned off by the company's low 0.8% forward yield. Eli Lilly's solid track record and modest cash payout ratio of 44% tell us plenty. That, combined with Eli Lilly's strong underlying business, makes it an attractive buy-and-hold option.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Eli Lilly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

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*Stock Advisor returns as of June 30, 2025

Prosper Junior Bakiny has positions in Eli Lilly. The Motley Fool has positions in and recommends Zoetis. The Motley Fool has a disclosure policy.

Key Points

• Iovance Biotherapeutics has proven to be an innovative biotech.

• However, the stock has declined significantly over the past year, partly due to its risk profile.

• Too much would have to fall Iovance's way for the stock to be a millionaire maker.

Over the past two years, Iovance Biotherapeutics (NASDAQ: IOVA), a small-cap biotech company, has made significant clinical and regulatory progress. However, the stock has also plunged over this period -- shares are currently trading for less than $2 apiece. Penny stocks tend to be risky, but Iovance Biotherapeutics has an exciting approved product and several potential catalysts that could jolt its stock price.

If Iovance Biotherapeutics' long-term plans come to fruition, the stock could skyrocket from current levels and deliver the kinds of returns over the next two decades (or so) that could help one become a millionaire. How likely is that to happen? Let's find out.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

An innovative approach to treating cancer

Iovance Biotherapeutics' claim to fame is that it developed Amtagvi, a medicine for advanced melanoma (skin cancer). There are at least two important things to note about this product. First, it is manufactured from patients' tumor-infiltrating lymphocytes (TILs), a type of white blood cell that destroys cancer cells. Second, Amtagvi became the first medicine of its kind approved by the U.S. Food and Drug Administration for the treatment of metastatic melanoma.

It's not surprising, then, that Amtagvi's sales have been growing at a good clip. Iovance Biotherapeutics expects to generate $275 million this year (at the midpoint) after racking up $164.1 million in revenue last year. The company's long-term strategy seems simple enough. It is currently seeking approval for Amtagvi in other regions, after which it will look to earn label expansions for the medicine.

Then, Iovance Biotherapeutics will work on developing other TIL-based therapies. If all of that happens without a hitch, Iovance Biotherapeutics could, indeed, generate life-changing returns from its current levels.

Will Iovance's breakthroughs be enough?

Suppose one invests $100,000 in Iovance Biotherapeutics today. It will take a compound annual growth rate of 12.2% to get to $1 million in 20 years, which is above the S&P 500's historical return. It's hard to bet on Iovance Biotherapeutics accomplishing such a feat despite its Amtagvi-related success. The medicine was a significant breakthrough and could achieve blockbuster status at some point. Even so, one issue with Amtagvi is that it is a complex medicine to administer.

The procedure requires collecting patients' cells, which are used to manufacture the therapy. It takes 34 days for the manufacturing work to be completed. Further, Iovance Biotherapeutics recently revised its guidance downward from between $400 million and $450 million for fiscal year 2025. It did so because it had miscalculated the timeline for the activation of authorized treatment centers where Amtagvi is administered.

Launch dynamics are complex for any medicine, but they are even more so for therapies like Amtagvi. This factor significantly complicates matters for Iovance Biotherapeutics, making the stock less attractive, as it impacts its revenue and earnings potential. In the meantime, the company estimates that it only has sufficient cash to keep the lights on until the second half of 2026. That's before we account for other obvious potential issues.

Consider that a lot would have to go right for Iovance Biotherapeutics to perform well through the next two decades. It will need to record consistent clinical and regulatory wins. Setbacks, particularly with otherwise promising products or pipeline candidates, will sink its stock price. That's the risk biotech investors have to live with, and the risk is far higher when dealing with a smaller drugmaker like Iovance. Perhaps Iovance Biotherapeutics will perform well regardless, but it's hard to bet on that happening, considering it has yet to establish itself.

The company currently has only two products on the market, remains unprofitable, and has only enough cash for the next two and a half years, facing some uncertainty due to the complexity of the therapies it markets. Between potential clinical trial failures, regulatory rejections, and the possibility that Iovance Biotherapeutics may have to resort to dilutive financing, the stock appears far too risky for most investors. It's worth keeping Iovance Biotherapeutics on your watchlist and considering investing small sums in the stock if its prospects improve.

Should you invest $1,000 in Iovance Biotherapeutics right now?

Before you buy stock in Iovance Biotherapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Iovance Biotherapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics. The Motley Fool has a disclosure policy.

Key Points

• CRISPR Therapeutics could stage a comeback thanks to clinical and commercial progress.

• Viking Therapeutics looks like a good bet on the fast-growing weight management market.

There are many promising corporations that investors can buy on a dip due to recent market volatility or company-specific issues that predate this year. Take, for instance, CRISPR Therapeutics (NASDAQ: CRSP) and Viking Therapeutics (NASDAQ: VKTX), two mid-cap biotech companies that have lagged broader equities over the trailing-12-month period.

Even with these poor performances, however, there are solid reasons to consider investing in these stocks, especially at current levels. Read on to find out more.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

1. CRISPR Therapeutics

CRISPR Therapeutics made a breakthrough when it created Casgevy, the first gene-editing medicine that used the Nobel Prize-winning CRISPR technique to earn approval. The stock performed well from its 2016 initial public offering (IPO) until about 2021 but has been on a downward trajectory ever since for three reasons.

First, clinical progress is one of the most significant drivers of the performance of smaller biotech stocks. Once they start hitting major milestones, investors tend to take some profits.

Second, Casgevy is a gene-editing therapy that's complex to administer. Despite earning approval in late 2023, the therapy hasn't yet contributed much to CRISPR Therapeutics' results.

Third, the company is unprofitable. That's a big no-no in the current precarious market environment.

That said, CRISPR Therapeutics' next breakthrough could help the stock bounce back. The company is developing several promising medicines and expects data readouts for ongoing clinical trials as early as this year.

CRISPR Therapeutics is targeting challenging areas. The biotech is looking to develop medicines for type 1 diabetes, some hard-to-treat cancers, and other areas. Progress on these fronts could send the stock soaring.

Furthermore, Casgevy will ultimately have a significant impact on CRISPR Therapeutics' financial results. The company will share the profits from this medicine with giant drugmaker Vertex Pharmaceuticals, its collaborator in the development of this medicine, but CRISPR Therapeutics' partnership with Vertex was a net positive for the smaller biotech.

For one, CRISPR Therapeutics probably would not have earned approval for the treatment as quickly as it did in some places, including some countries in the Middle East, where the medicine boasts a more substantial commercial opportunity for Casgevy than the U.S. Securing approval and commercialization in the Middle East alone would have been far too expensive for a smaller drugmaker. Second, partly due to its long-standing partnership with Vertex, CRISPR Therapeutics has a substantial amount of liquidity, ending the first quarter with $1.86 billion in cash and equivalents.

Lastly, Casgevy has blockbuster potential. It costs $2.2 million per treatment course in the U.S., while the two partners estimate about 60,000 patients in their target geographies. Between Casgevy's long-term potential and the company's innovative pipeline, CRISPR Therapeutics could eventually recover and deliver exceptional returns to investors who stay the course.

2. Viking Therapeutics

Viking Therapeutics was a relatively unknown biotech until last year, when it produced strong phase 2 results for VK2735, an investigational weight management therapy. Although the stock soared following this data readout, it hasn't performed well since.

Nothing has gone wrong with Viking Therapeutics' leading candidate -- it's just another case of investors taking some profits. However, Viking Therapeutics looks attractive for several reasons.

The market for anti-obesity therapies is rapidly growing. There are scores of investigational therapies in this field, but most haven't delivered the kind of mid-stage data VK2735 has. The biotech company also has an oral formulation of VK2735 that's currently in Phase 2 studies.

Furthermore, Viking Therapeutics has several other candidates in development. The company's VK2809 is a potential treatment for metabolic dysfunction-associated steatohepatitis, which is also entering phase 3 studies after completing mid-stage trials.

Lastly, Viking's VK0214 is being developed for X-linked adrenoleukodystrophy, a rare genetic disorder affecting the nervous system. VK0214 has earned the orphan drug designation from the U.S. Food and Drug Administration, an honor reserved for medicines that have shown promising clinical data for the treatment of an orphan (or rare) disease with unmet needs.

Viking Therapeutics' pipeline is impressive for a biotech company worth just $3 billion. If it achieves clinical and regulatory successes in the coming years, its share price will likely skyrocket.

There is some risk involved here, as is always the case with clinical-stage biotechs. The stock could drop if it encounters setbacks, particularly with its leading candidate, VK2735. It's important to keep that in mind. But investors comfortable with the volatility should strongly consider initiating a small position in Viking Therapeutics.

Should you invest $1,000 in CRISPR Therapeutics right now?

Before you buy stock in CRISPR Therapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CRISPR Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $939,655!*

Now, it’s worth noting Stock Advisor’s total average return is 1,045% — a market-crushing outperformance compared to 178% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Prosper Junior Bakiny has positions in Vertex Pharmaceuticals and Viking Therapeutics. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.