3 Magnificent Stocks to Buy and Hold Forever

Some people are fair-weather friends; others are lifelong. It's a similar story with stocks. Some you might hold only temporarily, while others you own for decades.

Three Fool.com contributors have identified healthcare stocks they think belong in the latter category. Here's why they view Eli Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO), and Vertex Pharmaceuticals (NASDAQ: VRTX) as magnificent stocks to buy and hold forever.

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Eli Lilly is a growth beast that looks unstoppable

David Jagielski (Eli Lilly): A forever stock you can put in your portfolio and not worry about is Eli Lilly. The healthcare company's robust financials, solid pipeline of drugs, and growing dividend highlight three of the best reasons to invest in the business.

The company is experiencing impressive growth due to its GLP-1 drugs, and those treatments are still in their early innings. For 2025, the company expects its revenue to come in between $58 billion and $61 billion, for a solid growth rate of 32%. And with a robust and growing pipeline, which currently features two dozen phase 3 trials in progress, there may be a lot more growth on the horizon for the company in the future.

Eli Lilly's terrific profit margins, which are in excess of 20%, also enable the business to reinvest earnings back into its operations to continue pumping money into research and development efforts and expanding its pipeline.

While its payout ratio of over 80% may seem high, that will come down as Eli Lilly continues scaling its operations. And the company has also been incredibly generous with dividend increases, as it has doubled its payout in a span of just five years. If not for the stock's fantastic returns in recent years, its dividend yield of 0.8% would be much higher than it is today, but that's a trade-off investors are likely to be more than happy with, as shares of Eli Lilly have soared 240% in three years.

While the pharma stock's valuation may not be cheap (it trades at more than 80 times earnings), it's a premium that's arguably worth paying, given how solid the business is. Eli Lilly's tremendous growth prospects and fantastic earnings numbers make it a no-brainer buy for the long haul.

Ignore the noise and stay the course

Prosper Junior Bakiny (Novo Nordisk): The past six months have been tumultuous for Novo Nordisk. The company's financial results, though strong, haven't quite lived up to expectations.

We can say the same about the drugmaker's next-gen weight loss medicine, CagriSema, which produced a mean weight loss of 22.7% in a phase 3 study, which is excellent but not quite the 25% management had predicted. These issues have led to Novo Nordisk's shares underperforming the market in the past few months.

However, this slump represents an excellent opportunity for long-term investors, as Novo Nordisk should still be able to deliver superior returns over the long run. Consider the company's pipeline, which is still producing gems. Novo Nordisk followed up on the CagriSema disappointment with highly encouraging results from a phase 1b/2a study for subcutaneous amycretin. The company's pipeline in the weight loss market looks exciting, and it boasts candidates across many other therapeutic areas.

Novo Nordisk's financial results should improve as it launches new products and wins new indications for existing medicines. Last year, it earned approval for Awiqli, a once-weekly insulin product, in several regions. It just earned a label expansion for Ozempic in reducing the risk of worsening kidney disease and cardiovascular death in patients with type 2 diabetes and kidney disease.

Beyond Novo Nordisk's current lineup and portfolio of approved medicines, the company seems to have a drug discovery engine, which for decades has allowed it to dominate the diabetes market.

Novo Nordisk's ability to innovate is perhaps its greatest strength. That's why it can deliver outsized returns over the long run, just as it has in the past. So investors should look beyond Novo Nordisk's recent headwinds. The stock remains a no-brainer pick for pharmaceutical investors.

An innovation dynamo

Keith Speights (Vertex Pharmaceuticals): Around 109,000 people have cystic fibrosis (CF). Only one company markets therapies that treat the underlying cause of their genetic disease: Vertex Pharmaceuticals. With the recent U.S. approval of Alyftrek, Vertex now has its most convenient and powerful CF therapy yet.

Vertex's CF franchise has made the big biotech company highly profitable. However, branching out beyond CF is highlighting just how much of an innovation dynamo that Vertex is.

For years, patients often had to turn to opioid drugs to alleviate their acute pain. Vertex's research into pain signal inhibitors enabled it to develop suzetrigine as a non-opioid alternative. Unsurprisingly, this therapy has an opportunity to be another blockbuster drug for the company.

Vertex leveraged its expertise in CF to target another disease that impacts even more patients -- APOL1-mediated kidney disease (AMKD). It's now evaluating inaxaplin in a late-state clinical trial targeting AMKD.

Arguably, the most intriguing pipeline focus for Vertex, though, is on curing type 1 diabetes (T1D). The big drugmaker has two potentially curative T1D therapies in clinical development, including zimislecel in phase 3 testing.

Vertex has wisely incorporated advances made by other innovative companies, too. For example, it partnered with CRISPR Therapeutics to develop and ultimately market Casgevy, a gene-editing therapy that's a one-time treatment for sickle cell disease and transfusion-dependent beta-thalassemia.

I like Vertex's CF monopoly. I love its growth prospects thanks to a strong pipeline. Therefore, I don't think there's any doubt that this is a magnificent stock to buy and hold forever.

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David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in Vertex Pharmaceuticals. Prosper Junior Bakiny has positions in Eli Lilly, Novo Nordisk, and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.