Top Picks 2017: Vertex Pharmaceuticals

01/05/2017 6:00 am EST


Crista Huff

Editor, Cabot Undervalued Stocks Advisor

My Top Pick for speculators for the coming year is a biotech company, explains leading growth and income stock specialist Crista Huff, editor of Cabot Undervalued Stocks Advisor.

Vertex Pharmaceuticals (VRTX) is prominent for its world-leading treatments for cystic fibrosis. Vertex is expected to outperform its peers in earnings growth through 2020.

Vertex is expected to report earnings per share of $2.27 in 2017 (December year-end), reflecting 195% earnings growth. This aggressive growth stock has a 2017 price/earnings ratio of 34.

As you know, pharmaceutical stocks got left behind in investors' post-election race to own financial and basic industry stocks.

But the benefit of sector rotations is that we get to buy shares of healthy, growing companies while their prices are low.

In December, the company announced that it had come to a pricing and reimbursement agreement with Germany on Orkambi, a Vertex treatment for cystic fibrosis. This is bullish news.

VRTX is a greatly undervalued aggressive growth stock. Patient investors should take advantage of the current low price. However, we caution that investors should expect volatility.

VRTX did a lot of sideways trading in 2016 between $75 and $103. Buy it while it's cheap. If VRTX retraces its 2015 high of $141 this year, that's a potential capital gain of about 75%.

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