We recently published a list of the 12 Best Long-Term Growth Stocks to Buy Now. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against other best long-term growth stocks to buy right now.
Expectations Regarding Fed’s Rate Cuts in 2025
Released on Friday, February 7, the January jobs report showed resilience in the labor market with higher-than-expected wage growth. December’s monthly job gains also showed an upward revision, highlighting that the US labor market ended 2024 in a better position than previously reported. Economists are thus of the opinion that the Federal Reserve may not cut rates in the near future. Consequently, this increases pressure on inflation data to cool down before the central bank considers slashing borrowing costs.
On January 30, Jeffrey Gundlach, CEO of DoubleLine Capital, appeared on CNBC’s “Closing Bell” to discuss the stock market and the Fed’s decision to leave rates unchanged. Sticking to the opinion he gave in December, Gundlach was of the view that 2025 would bring a maximum of two rate cuts by the Fed. He reiterated that he was not predicting two cuts but that two would be the maximum number attained in 2025, keeping one rate cut as the base case for the year. The unemployment rate went up for several consecutive months before ticking down, which Gundlach thinks is a matter of deep solace for the chair of the Federal Reserve, Jerome Powell.
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What Does the 2025 Outlook for the Stock Market Look Like?
On February 10, Mary Ann Bartels, Sanctuary Wealth’s chief investment strategist, appeared on CNBC to discuss the 2025 outlook for the stock market. She showed bullish sentiment towards the market, particularly due to strong earnings growth. Comparing the current environment to previous periods of innovation, such as the 1920s and the 1990s, Bartels highlighted the role of robotics, AI, and Web3 in driving long-term growth in the present.
She noted that companies today fund investments with cash and equity rather than excessive leverage, unlike the 1990s. Her estimates showed that the S&P could reach 7,200 to 7,400 this year and 10,000 to 13,000 by the decade’s end, as she expects the bull market to extend through 2029 to 2030.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 growth stocks. We checked their 5-year revenue growth (at least above 15%) and then selected the top 12 most popular stocks among elite hedge funds as of fiscal Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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)
5-Year Revenue Growth: 15.08%
Number of Hedge Funds: 106
Eli Lilly and Company (NYSE:LLY) develops, manufactures, discovers, and sells pharmaceutical products. These products span oncology, diabetes, immunology, neuroscience, and other therapies. Investors are bullish on Eli Lilly and Company (NYSE:LLY) due to its in-demand GLP-1 drugs, used to treat diabetes and obesity, which are still in their early growth stages, and the company’s strong financials.
The company reported a 32% revenue growth in fiscal 2024 compared to fiscal 2023, exceeding its first-time guidance by $4 billion. It also made substantial progress across its strategic deliverables in fiscal Q4 2024, with revenue growing by 45% in the quarter, supported by a strong uptake of its Mounjaro and Zepbound drugs. Eli Lilly and Company (NYSE:LLY) also saw solid performance across immunology, oncology, and neuroscience.
On February 10, the company announced a collaboration with AdvanCell to advance cancer treatment through targeted alpha therapies. By combining Eli Lilly and Company’s (NYSE:LLY) expertise in drug manufacturing with AdvanCell’s Pb-212 production technology and infrastructure, the collaboration aims to expedite clinical progress for innovative radiopharmaceuticals. This is expected to be a significant opportunity for the company to further strengthen its cancer treatment portfolio and explore Pb-212-based therapies.
Aristotle Atlantic Partners, LLC highlighted LLY in its Q4 2024 investor letter. Here is what the firm has to say:
“Eli Lilly and Company (NYSE:LLY) contributed to performance in the fourth quarter. While shares underperformed, our underweight position versus the benchmark resulted in a positive contribution to relative returns. Lilly shares were weak following an uncharacteristic third-quarter earnings miss driven by softer-than-expected sales of its blockbuster diabetes and obesity drugs. The company blamed this partly on wholesaler destocking. Lilly reinforced its view that end demand for the drugs remains strong.
Overall, LLY ranks 11th on our list of best long-term growth stocks to buy right now. While we acknowledge the potential of LLY, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.
