We recently compiled a list of the 10 stocks that will make you rich in 5-10 years. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against the other the Stock That Will Make You Rich in 5-10 Years.
Economic Resilience and Surprising Rate Cut Amid Geopolitical Tensions
The US economy grew by 3% in the second quarter, and the stock market hit all-time highs in the third quarter, averting fears of a recession at hand. While the economy has remained resilient for the better part of the year, the US Federal Reserve’s 50 basis point rate cut surprised many analysts.
Jamie Dimon believes the steep cut might be justified as geopolitical uncertainties can potentially disrupt the gains achieved by affecting supply chains and triggering uncertainties and fears in the market.
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Powell and other Fed officials are open to further lowering interest rates after last month’s half-point cut, but there’s market debate on the pace.
Soaring tensions in the Middle East with Israel invading Lebanon and threatening to attack Iran have triggered a layer of uncertainty, which Dimon believes could have a significant impact on the economy. Consequently, the banker believes that the 50 basis point cut could offer the much-needed economic support as inflation continues to drop.
Nevertheless, James Demerit, Main Street Research CIO, believes the upward momentum in the equity markets will persist as the macro environment improves. While valuations appear to have gotten out of hand, there are still opportunities for stocks trading below their fair value as the investment environment improves.
Apart from the magnificent seven stocks whose valuations have gotten out of hand, other stocks are trading at 16 times earnings, which, according to Demmert, is cheap considering the strong fundamentals that support a further rally. Companies that have consistently grown sales and profits should continue delivering regardless of the uncertainties around the US election and soaring geopolitical tensions.
According to Emily Bowersock Hill, CEO of Bowersock Capital Partners, it is time to be upbeat about the market heading into year-end. “The bull market has survived the year’s historically weakest quarter,” said Hill in an interview with CNBC. “It is likely to remain intact through at least the end of the year, as earnings remain strong, interest rates are moving lower and consumers are still spending.”
Which Stocks Could Make You Rich in 5 to 10 Years?
When considering which stocks to buy, it’s beneficial to ask, “Which industries are experiencing the most rapid growth?” Despite some sectors facing challenges post-pandemic, many are flourishing, offering abundant opportunities. The global economy is rapidly evolving, with industries like artificial intelligence (AI), healthcare, travel, online retail, cybersecurity, and green energy experiencing significant growth. The AI market alone is projected to reach $407 billion by 2027 (according to estimates from Markets and Markets). The Bureau of Labor Statistics projects that between 2020 and 2030, total employment in the United States will expand by 11.9 million, or 7.7%, to 165.4 million from 153.5 million.
Some of the top stocks that will make you rich in 5 to 10 years are companies that can rally as the global economy grows on the back of favorable monetary policies. Additionally, they include stocks of companies that are leaders in their respective fields and well-poised to benefit from technological changes such as artificial intelligence.
In an interview with CNBC, Savita Subramanian, BofA Securities head, reiterated utilities and large-cap real estate stocks are well positioned to perform heading into year end. Likewise, industrials and financials should receive a significant boost if the overall economy improves.
According to Subramanian, the idea of the Fed cutting is not only liquidity inducing that should benefit the equity market but a move that ends up cutting money market yields. With liquidity slowly moving out of short-term bonds, most of it is ending up in equity markets as investors take note of high-risk reward opportunities at highly discounted valuations. Subramanian believes dividend stocks and growth stocks are well-positioned to generate significant value going forward.
With this economic perspective in mind, let’s start our list of stocks that will make you rich in 5-10 years.
Source:pixabay
Our Methodology
To compile the list of the stocks that will make you rich in 5-10 years, we sifted through multiple reports and rankings and compiled an initial list of 20 possible stocks that experts and analysts believe have multi-year growth opportunities. We then selected the 10 stocks that were the most popular among hedge funds and ranked them in ascending order based on the number of hedge funds that held stakes in them, as of the end of Q2 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders as of Q2: 100
Eli Lilly and Company (NYSE:LLY) is one of the stocks that will make you rich in 5-10 years while diversifying an investment portfolio into the healthcare sector focusing on the development and marketing of pharmaceuticals. The pharmaceutical company has become the largest healthcare company by market capitalization, riding a wave of solid financial results and excellent regulatory progress.
Tirzepatide, marketed under Mounjaro and Zepbound, has significantly accelerated the growth of Eli Lilly and Company (NYSE:LLY). Mounjaro and Zepbound had $3.1 billion and $1.2 billion in sales, respectively, in the second quarter. That’s more than $4 billion in sales in just three months in an industry where most drugs never make $1 billion a year at any point in their patent-protected life cycles.
Likewise, Eli Lilly and Company (NYSE:LLY) is already looking into the future as it looks to reduce its reliance on specific drugs. Its pipeline of late-stage development includes multiple products that show promise. It is developing two weight loss medications, orforglipron and retatrutide, which, by some estimates, could each bring in well over $1 billion in revenue annually by 2030.
The company’s once-weekly insulin medicine could also earn regulatory approval within the next year or two. Eli Lilly recently achieved yet another significant regulatory victory when the FDA authorized Kisunla, also known as donanemab, as an Alzheimer’s disease treatment.
Eli Lilly and Company (NYSE:LLY)’s dividend plan also appears appealing. Its yield of 0.58% is low, but that’s because its share price has been rising dramatically recently. Over the last five years, the company has increased payouts by 101.6%.
Eli Lilly and Company (NYSE:LLY) was a part of 100 hedge fund portfolios at the end of Q2 2024, down from 109 in the previous quarter, as per Insider Monkey’s database. Fisher Asset Management owned the largest stake in the company, worth over $4.4 billion.
Here is what PGIM Jennison Health Sciences Fund said about Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Eli Lilly and Company (NYSE:LLY) is a diversified biopharmaceutical company with core franchises in Diabetes, Obesity, Immunology, Neurodegeneration, and Oncology. The company is one of the two global leaders in diabetes with blockbuster products in Trulicity and recently launched Mounjaro (tirzepatide) to serve this large underserved market. To date, the Mounjaro launch is the strongest for any diabetes drug ever launched, which we attribute to off label usage in the obesity indication as well as on label use in diabetes. We believe the tirzepatide (the generic name for Mounjaro) franchise is also uniquely positioned to grow substantially from here thanks to its recent approval for obesity. To that note, in late 2023, Eli Lilly received approval for tirzepatide in obesity and is commercializing it for obesity under a new brand name, Zepbound. While still early in the launch, uptake has been extremely strong, exceeding that of both Wegovy and Mounjaro at the same timepoint in their launches. While Alzheimer’s Disease has been a tough market for drug developers, Eli Lilly has breakthrough designation from the food and drug administration (FDA) for donanemab and recently presented Phase III pivotal trial data that positions donanemab as the most efficacious drug in the class. In June, the FDA advisory committee voted unanimously in favor of donanemab as an effective treatment where the benefits outweigh the risks, praising the therapy as innovative. Donanemab was then approved under the brand name Kisunla in early July. Eli Lilly also has exciting franchises in dermatology, immunology, and oncology that are starting to add meaningfully to growth. With a proven history of strong commercial execution and one of the highest research and development (R&D) success rates in the industry, we see opportunity for continued success. With a lack of meaningful patent expirations for the rest of the decade. Eli Lilly is uniquely positioned amongst its larger-cap peers. Recent positive performance has been driven by the continued strong growth of Mounjaro and Zepbound, which led to a big guidance raise on the 1Q call, an unusual action for Eli Lilly this early in the year, which speaks to their confidence in the strong trends they are seeing.
Overall LLY ranks 5th on our list of 10 stocks that will make you rich in 5-10 years. While we acknowledge the potential of LLY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LLY, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.