When many investors hear the word mania, they may think of artificial intelligence (AI) stocks or Bitcoin. Both investments have yielded market-beating returns and have room to run higher. However, if you’re looking for a different kind of mania to invest in, it’s a good time to consider weight-loss stocks.
In 2023, the initials GLP-1 swept the nation. This stands for glucagon-like peptide-1. GLP-1 drugs have been traditionally used to treat type-2 diabetes and patients with high blood sugar because of the way it helps stimulate insulin secretion and slow the release of glucagon. However, studies show that GLP-1 treatments contribute to weight loss by reducing appetite and increasing a feeling of satiety.
This is a growing sector, that according to Global Market Insights was valued at $22.4 billion in 2022. It’s expected to grow at a compound annual growth rate (CAGR) of 9.6% between 2023 and 2032. That’s a higher CAGR than what was being forecast just a few years ago.
Also, undervalued stocks like Pfizer (NYSE:PFE) have GLP-1 candidates in clinical trials. So, you may want to put those on a watch list. However, by the time those companies get a product on the market, this may be a much more mature sector.
If you’re looking to take advantage of the red-hot growth in weight-loss stocks, these are three companies that you can own a piece of today.
Novo Nordisk (NVO)
Although it seems that GLP-1 weight-loss medications are relatively new, Novo Nordisk (NYSE:NVO) received its first approval back in 2014. And Wegovy, which is similar to the company’s diabetes treatment Ozempic, was approved in 2021.
Novo Nordisk has over 54% of the global market share for GLP-1 treatments. However, the company isn’t sitting on its lead.
To begin with, in March the company received an expanded label for Wegovy. This allows Wegovy to be prescribed in order to reduce risks of major cardiovascular events (MACE) including cardiovascular death, non-fatal heart attack, or non-fatal strokes. This is for adults who are either overweight or obese and have an established cardiovascular disease.
Also, Novo Nordisk is testing an oral version of Wegovy, Amycretin, which is a once-a-day pill. Since the pill is in Phase 2 trials, it will take some time to come to market. Plus, some setbacks are possible along the way.
Finally, NVO stock is up 279% in the last year with an expectation of over 20% earnings growth. However, the stock still looks like one that investors should buy on any meaningful pullback.
Eli Lilly & Co. (LLY)
The field of weight-loss stocks will be getting crowded in coming years. But for now, Eli Lilly (NYSE:LLY) makes up the other half of the duopoly with Novo Nordisk. Lilly’s GLP-1 entry, Zepbound, was approved last year. Zepbound is similar to the company’s Type-2 diabetes drug, Mounjaro.
Weekly prescriptions of Zepbound in the U.S. exceeded 25,000 within weeks of FDA approval. And, the recent announcement that patients can now order Zepbound through Amazon (NASDAQ:AMZN) could be another potential catalyst for the drug.
LLY stock is up about 133% in the last 12 months,. That may make investors wait for a pullback before taking a position. However, the company may grow into its current valuation.
In addition to Zepbound, Eli Lilly has a broad portfolio of drugs that includes Trulicity for diabetes and Verzenio for cancer. Hence, it’s the reason analysts project over 40% earnings growth in the next 12 months.
Global X Health & Wellness ETF (BFIT)
It’s a stock picker’s market, which is why it’s generally a good idea to pick individual stocks within a sector. However, when it comes to investing in weight-loss stocks, investors can consider multiple angles. The Global X Health & Wellness ETF (NYSEARCA:BFIT) covers several of these options while focusing on companies with revenue or main business purpose is covered by a cross- sector definition of health and wellness.
As part of that focus, the fund’s holdings include high-growth stocks such as Celsius (NASDAQ:CELH) and Lululemon (NASDAQ:LULU). And since many people who start on weight-loss drugs also being an exercise regimen, the fund includes names like Planet Fitness (NYSE:PLNT) and Peloton (NASDAQ:PTON).
This is a small fund with just $8.37 million of assets under management as of March 2024. The fund is indexed to the Global Health & Wellness Thematic Index and invests more than 80% of its assets into that index’s securities. The net expense ratio is an attractive 0.50% and it pays a dividend with a yield of 1.64%.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
