Consensus forecasts call for very low or slightly negative U.S. economic growth in the first half of 2023, with some improvement in the second half of the year, observes Rich Moroney, editor of Dow Theory Forecasts.
A slow-growing U.S. economy is vulnerable to downside shocks, especially with the global economy expected to struggle. That’s one reason we approach the new year with more caution than usual.
Nevertheless, we still have favorites for year-ahead gains, such as Vertex Pharmaceuticals (VRTX) — the latest addition to our Focus List, which represents our current top recommendations.
The biotech firm’s biggest product, Trikafta, treats most of the 83,000 cystic fibrosis patients in North America, Europe, and Australia. Trikafta accounts for 86% of Vertex’s product sales, yet management still sees greater heights ahead.
The company continues to seek approval for Trikafta to treat different types of cystic fibrosis patients. Helped by its efforts to drive other countries to reimburse for treatment, Vertex says the drug could potentially treat 90% of cystic fibrosis sufferers throughout the world.
Admittedly, relying on one product for so much revenue adds risk to the stock. But Trikafta enjoys a first-mover advantage and currently faces limited competition in the cystic fibrosis market.
Vertex has managed seven consecutive years with at least 22% sales growth, and operating profits rose at least 24% in each of the five years since the company became profitable.
We think Trikafta still has room to grow. In addition, the company is advancing treatments for other ailments, including a genetic disease called alpha-1 antitrypsin deficiency and sickle cell disease. Drugs in development don’t always pan out, but this pipeline looks promising.