As the saying goes, time is money – and this holds particularly true when it comes to investing in the stock market. While short-term fluctuations can be daunting, history has shown that major indexes tend to trend upward over longer periods, often delivering attractive returns for patient investors.
However, it’s not enough to simply throw money at any random company. Careful selection is crucial to reaping the rewards of long-term investing. With that in mind, let’s explore two healthcare giants that could prove to be exceptional choices for the next decade: Medtronic and Sanofi.
Medtronic: Decades of Medical Innovation
Medtronic, a leading medical device manufacturer, has faced its share of challenges in recent years. Slow revenue growth, pandemic-related disruptions, and economic headwinds have weighed on the company’s performance. However, dismissing Medtronic’s prospects based on recent struggles would be a grave mistake.
For decades, Medtronic has navigated the complex and heavily regulated healthcare industry, consistently developing cutting-edge medical devices while weathering difficult economic conditions. While past success does not guarantee future triumphs, Medtronic’s underlying business retains the qualities that have allowed it to thrive for so long.
Furthermore, the company is actively taking steps to improve its performance. Medtronic is divesting its low-growth patient monitoring and respiratory intervention unit, doubling down on areas with higher growth potential, such as its diabetes care segment.
In the second quarter of its fiscal 2024, which ended on October 27, 2023, Medtronic’s diabetes care unit reported revenue of $610 million, a 9.7% increase compared to the same period a year earlier. While this may not sound like a massive jump, it’s worth noting that Medtronic’s total revenue of $8 billion grew by a more modest 5.3%. None of the company’s other major segments outpaced diabetes care in terms of revenue growth.
This impressive performance can be partly attributed to the continued adoption of the company’s innovative MiniMed 780G insulin pump, which helps maintain stable glucose levels. The MiniMed 780G was launched in the U.S. just last year, leaving ample room for further growth.
Medtronic is also increasingly applying artificial intelligence to enhance its products, efforts that could prove highly lucrative down the line. The company also has promising growth opportunities in areas like robotic-assisted surgery, with its Hugo system.
Finally, income-seeking investors should appreciate Medtronic’s exceptional dividend history. The company is currently on its 46th consecutive year of dividend increases – since 1978, its dividend per share has grown at a compound annual rate of 16%. Within a few years, Medtronic should attain the coveted status of a Dividend King.
Medtronic offers a compelling proposition for investors seeking a steady, reliable company capable of delivering solid long-term returns, as well as those prioritizing income through dividends.
Sanofi: Focusing on Core Strengths
Sanofi, a multinational pharmaceutical giant, has not enjoyed stellar stock performance over the past year, partly due to underwhelming revenue and earnings growth in 2023. The drugmaker’s top line increased by a modest 5.3% year-over-year to 43.1 billion euros ($46.4 billion), while net earnings per share fell nearly 2% compared to fiscal 2022, to 8.11 euros ($8.70).
However, despite these challenges, Sanofi made significant clinical and regulatory progress last year. First, it earned approval for Beyfortus, one of the first vaccines for respiratory syncytial virus (RSV) to hit the market. Sanofi also launched a brand-new hemophilia medicine called Altuviiio.
On the clinical front, the company reported positive results for Dupixent, one of its fastest-growing products, in treating chronic obstructive pulmonary disease (COPD). This additional indication should substantially boost Dupixent’s already impressive sales growth.
But there’s more happening at Sanofi. Last year, the company announced plans to spin off its consumer healthcare business, a move that has become increasingly popular among major pharmaceutical companies in recent years. This transaction is expected to be completed by the fourth quarter. Sanofi’s goal is to double down on its core biopharmaceutical operations, a move that should help the biotech push important programs through its pipeline.
Sanofi expects at least five new investigational vaccines – one of its best-performing segments in recent years – to enter late-stage studies by next year. The company’s existing phase 3 pipeline is already rich, boasting 28 programs, with dozens more in phase 1 and 2 studies. Achieving a handful of approvals or new indications per year is well within reach for the drugmaker.
With such catalysts in motion, Sanofi should be positioned to deliver solid returns over the next decade.
Conclusion
While short-term market volatility can be unnerving, history has shown that equity investments tend to appreciate steadily over longer periods. By carefully selecting quality healthcare companies like Medtronic and Sanofi, investors can position themselves to potentially reap the rewards of long-term investing.
Medtronic’s decades of experience in navigating the complex healthcare landscape, its focus on high-growth areas like diabetes care, and its commitment to enhancing shareholder returns through dividends make it an attractive choice. Meanwhile, Sanofi’s clinical progress, pipeline richness, and strategic refocusing on its core biopharmaceutical strengths suggest substantial growth potential in the years ahead.
As with any investment decision, thorough research and a long-term mindset are essential. By exercising patience and choosing wisely, investors can increase their chances of achieving their financial goals over the next decade and beyond.
