1. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 100
Cramer remains steadfast on Eli Lilly and Company (NYSE:LLY) as per Mad Money’s episode on September 30. Despite there being competitors, he believes that “you can’t really compete against a company with that amount of firepower.”
It is a prominent global pharmaceutical company dedicated to discovering, developing, and marketing medications that address significant health issues. The company is actively working to redefine diabetes care, tackle obesity and its severe long-term consequences, advance treatments for Alzheimer’s disease, and provide new approaches for challenging immune system disorders and different types of cancers.
The company has established a manufacturing presence with facilities in nine countries. Cramer highlighted that “what’s going to matter with Lilly is the moat it has by building these gigantic factories.”
In 2023, Eli Lilly (NYSE:LLY) announced a substantial investment of €2.3 billion to significantly expand its operations in Germany. The expansion is part of a larger plan to advance manufacturing capabilities, which has become a top priority for the management.
Earlier in May, it revealed an additional $5.3 billion investment in its manufacturing sites in Lebanon, Indiana, bringing the total investment there to an impressive $9 billion. Since 2020, the company has committed over $18 billion to build, upgrade, or acquire manufacturing facilities in both the U.S. and Europe.
Cramer also made note of the fact that the “stock climbed on overwhelming orders for GLP-1 drugs.” The expansion seeks to boost the production of essential ingredients for key products like Zepbound and Mounjaro.
The company launched Zepbound, a groundbreaking treatment for obesity that activates specific hormone receptors, marking a new approach in the market. Mounjaro, another innovative product, is the first approved medication for type 2 diabetes that targets these same receptors.
In the second quarter, Eli Lilly (NYSE:LLY) reported a remarkable 36% increase in revenue, largely driven by the success of Mounjaro, Zepbound, and Verzenio. The revenue from new products surged from $3.46 billion to $4.46 billion, which was owed to Mounjaro and Zepbound.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Shares of global pharmaceutical company Eli Lilly and Company (NYSE:LLY) increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss. In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
While we acknowledge the potential of Eli Lilly and Company (NYSE: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 but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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