It's always a great time to invest in quality businesses that can prime your portfolio for long-term growth. It's important to be selective with the companies that you add to your portfolio and ensure that you only put cash into investments that align with your overall investment priorities, risk tolerance, and long-term goals.
You should also only put cash to work that you can leave in your portfolio for a few years, not funds that you might soon need for bills or other financial obligations. On that note, if you're looking for top-notch growth stocks to buy right now and have $1,000 available to invest, here are two names to consider.
1. Eli Lilly
Eli Lilly (LLY -1.38%) has been the darling of pharmaceutical stocks in the last 12 to 18 months, with shares rocketing upward as the popularity of its GLP-1 drugs has propelled revenue and earnings. Bear in mind, this is one of the oldest healthcare companies in the world, with a lineup of top-selling drugs across a range of disease categories that target everything from various cancers and cardiovascular ailments to endocrine disorders and neurological conditions.
In the first nine months of 2024 alone, shares roared upward to the tune of about 62%. After the company reported its earnings for the third quarter of 2024, shares took a double-digit nosedive as investors responded negatively to a few key points, including a slight pullback in full-year guidance. The company also reported financial figures that were slightly below what Wall Street had expected.
In terms of its full-year guidance, where Eli Lilly was targeting revenue for the 12-month period in the $45.4 billion to $46.6 billion range, the company is now projecting that it will deliver in the ballpark of $45.4 billion to $46 billion. Its Q3 revenue was around $800 million below what analysts had aimed for.
That being said, a closer look is warranted, and the long-term outlook for this business is anything but dismal. Revenue in Q3 2024 rose 20% year over year to $11.4 billion. The company sold rights for its olanzapine portfolio in Q3, featuring products used to treat ailments such as schizophrenia and bipolar disorder. If you exclude revenue from this portfolio, Eli Lilly's top line actually jumped 42% on a year-over-year basis, which is a bit more than the 36% growth it reported in the second quarter. The company also reported net income of approximately $970 million in Q3.
Tirzepatide, which is the main active ingredient in its top-selling drugs Mounjaro (for diabetes) and Zepbound (for weight loss), is being studied by Eli Lilly across multiple other disease areas. For example, positive phase 3 trial data from a 176-week study of tirzepatide demonstrated a 94% reduction in the risk of developing type 2 diabetes in adults with pre-diabetes who are obese or overweight.
Another first-of-its-kind study initiated by Eli Lilly has been studying tirzepatide in adults with heart failure with preserved ejection fraction (HFpEF) and obesity. In this phase 3 trial, tirzepatide reduced heart failure symptoms and physical limitations while lowering the risk of worsening heart failure events by 38%. Risk of hospitalization for heart failure was also reduced by 56% in trial patients taking tirzepatide. In short, the future revenue and profit opportunities from tirzepatide may be in the very early innings.
In Q3, sales of Mounjaro rose more than 121% year over year to $3.1 billion, while Zepbound (which was just approved last November) raked in $1.3 billion in sales. This was despite negative effects for both drugs cited by Eli Lilly that were caused by inventory decreases in the wholesaler channel. Blockbuster cancer drug Verzenio generated $1.37 billion in sales in the quarter, up 32% from one year ago, while sales of autoimmune disease drug Taltz jumped 18% to $879.6 million.
While investors appear to be particularly reactionary in the current environment, that can present an opportunity for those with a sufficient buy-and-hold horizon to take a slice of the action. While Eli Lilly doesn't trade at a cheap valuation by any means, its annual dividend of $5.20 and steady increase to its payout can augment total investor returns. Investors who want to become part-owner in a top healthcare business with a steady global footprint may be remiss to overlook this quality stock.
2. Monday.com
Monday.com (MNDY -0.85%) is a low-code and no-code platform that helps organizations build the work management tools and software applications they need to ensure business operations run smoothly. The company derives its revenue from monthly or annual subscription agreements that it enters into with customers who use its cloud-based platform.
Monday.com's software enables everything from project management and collaboration to helping keep tools and files in a single location for easy access. Clients with little to no coding experience can leverage its platform to develop customized workflow apps featuring boards, charts, and other important automation solutions.
Companies like Canva, Lionsgate, and Coca-Cola are just a handful of the big names on Monday.com's client roster. Investors have been particularly optimistic about Monday.com's performance recently, with shares skyrocketing to the tune of about 50% over the trailing 12-month period.
As always, share price is never a reason to buy (or sell) a stock. You need to look at the underlying business, its drivers and detractors of growth, its financial performance, its industry, and its long-term growth runway to gain a clear picture of whether it's a wise fit for your portfolio. In the case of Monday.com, the company has only been in business since 2012, so it's still in the relatively early stages of its potential growth story.
Management estimates that the company operates in a large and growing total addressable market, which could hit a valuation of $150 billion by the year 2026. The diverse range of solutions that Monday.com's platform offers allows it to target various segments of its overall market opportunity, including the $30 billion customer relationship management (CRM) software market.
From a financial perspective, Monday.com is doing quite well. Its third-quarter revenue rose 33% from the year-ago period to $251 million, and the company officially surpassed the $1 billion annual recurring revenue (ARR) mark. Its overall net dollar retention rate (NRR) increased to 111%, while NRR for customers with more than $100,000 in ARR was 115%.
The number of paid customers with more than $100,000 in ARR jumped 44% from one year ago. Meanwhile, the company's second-largest customer, which is an unnamed international technology company, more than doubled its seat count to 60,000 from 25,000. Although Monday.com is not profitable on the basis of generally accepted accounting principles (GAAP), cash flow is another core profitability metric to consider.
From a free cash flow perspective, the company raked in $82.4 million of free cash flow, while net cash provided by operating activities was $86.6 million in Q3. While investors may need a certain level of risk tolerance to invest in software stocks, this resilient business looks like a compelling addition to a well-diversified portfolio.
