2 Monster Stocks You Can Buy Without Hesitation

Investing in stocks is a great way for most people to grow their wealth over time. However, not all stocks are created equal. Some have little chance of producing solid returns over the long term, while others look so promising that investing in them seems almost a no-brainer.

Let’s consider two companies that fall into the latter category. Merck (MRK 0.59%) and intuitive surgery (ISRG 0.69%). Find out below why these healthcare giants are solid choices for the long term.

1. Merck

Merck is one of the world’s largest healthcare companies. It sells Keytruda, an anticancer drug that ranked first in the industry last year. Keytruda has maintained solid momentum over the years, garnering an impressive number of approvals while growing sales at a good pace. This has been Merck’s main growth driver for some time, and should continue until it faces a patent cliff near the end of the decade.

Meanwhile, Merck’s financial results continue to be strong. Although this was not the case last year due to the negative impact of a significant decline in sales of the coronavirus treatment Lagevrio. Merck’s sales increased just 1% from the previous year to $60.1 billion. Excluding Lagevrio, the company’s sales were up an even better 9%. Keytruda’s sales were $25 billion, up 19% compared to the same period last year.

Merck’s vaccine business is also performing quite well, especially with its HPV vaccines Gardasil and Gardasil 9. Their total sales this year increased 29% to $8.9 billion.

Merck has a major catalyst on the horizon. The company is awaiting approval for its pulmonary arterial hypertension (PAH) treatment, sotatercept, which is expected to come as early as next month. Unlike other medications, sotatercept targets the root cause of PAH. It looks like it will be one of Keytruda’s successors once Keytruda starts facing generic competition.

Sotatercept will not replace Keytruda itself, but will be an integral part of Merck’s post-Keytruda strategy. The company’s pipeline should produce other significant approvals in the coming years, including the approval of MK-0616, a highly promising treatment for hypercholesterolemia currently in Phase 3 studies.

In total, Merck’s pipeline includes 30 Phase 3 programs and 80 Phase 2 studies. Finding a full roster to completely replace Keytruda won’t be easy, but the company’s track record strongly suggests it could be done.

Merck is also a great dividend stock. Payouts have increased 40% over the last five years and currently offer a yield of 2.41%. Whether seeking growth or dividends, Merck’s impeccable track record and solid foundational businesses make it a solid choice for long-term investors.

2. Intuitive surgery

Intuitive Surgical specializes in developing and marketing robotic-assisted surgery (RAS) devices, such as its best-known product, the da Vinci System. It is a clear leader in a very low penetration market with significant barriers to entry.

Let’s start with the difficulties of creating in the RAS market. First, competitors will have to invest years and a small fortune to develop viable robotic systems. This is just the first step. The next step is to test it and then get regulatory approval for it. This entire process could take 10 years.

medical device expert Medtronic Intuitive Surgical has been challenging Intuitive Surgical with its own RAS system, Hugo. It is currently being used in some countries, but has yet to gain approval in the most important ones. United States In contrast, Intuitive has already taken all of these steps, giving it a significant advantage.

Plus, there is a huge runway in front. As Medtronic executives noted during the company’s fourth-quarter earnings call, only about 5% of procedures can currently be performed by robots. And Intuitive Surgical continues to move forward.

Last year, Intuitive Surgical’s revenue increased 14.5% from the previous year to $7.1 billion. Globally, da Vinci surgeries surged 21% in the fourth quarter. Intuitive also ended the year with 8,606 da Vinci systems installed, a 14% increase over the previous year.

The emergence of weight loss drugs such as Ozempic has reduced the demand for weight loss surgery, impacting the company’s financial performance. However, since bariatric surgery only accounts for 4-5% of surgeries worldwide, this is not a problem in the long term. Considering how low penetration the RAS market is, this is a drop in the bucket compared to the vast opportunity available to the company.

As a result, Intuitive Surgical remains an obvious choice for long-term focused, growth-oriented investors.