Eli Lilly has just begun tapping into the massive opportunity in chronic weight management.
Intuitive Surgical can bounce back thanks to innovation, a strong moat, and a large addressable market.
Some stocks look too attractive to pass up, given their incredibly strong businesses and excellent prospects. In my view, that's the case with Eli Lilly (NYSE: LLY) and Intuitive Surgical (NASDAQ: ISRG), two healthcare companies. These stocks have delivered excellent returns over the past decade, but neither has peaked yet. Here is why Eli Lilly and Intuitive Surgical are outstanding stocks to buy.
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Obesity is considered an epidemic. It affects a significant percentage of the population, particularly in the U.S., where about 40% of adults are obese, according to the U.S. Centers for Disease Control and Prevention. Obesity is linked to dozens of diseases and costs the U.S. healthcare system tens of billions of dollars every year. For all these reasons, the market for weight management medicines is growing rapidly, and Eli Lilly is currently the leader in this niche.
The company's approved portfolio features Zepbound, a subcutaneous anti-obesity drug, and Foundayo, an oral pill. Both are performing well and helping Eli Lilly grow its revenue much faster than its similarly sized peers in the pharmaceutical industry.

LLY Revenue (Quarterly YoY Growth) data by YCharts
However, Eli Lilly will start facing more competition in this area over the next few years. Not to worry: The company is working hard on next-gen weight-loss therapies, some of which could be even better than its current ones.
Eli Lilly is looking to expand the market, as it did with Foundayo, which is attracting mostly brand-new patients. The company's newer, differentiated medicines might do the same. Eli Lilly's retatrutide, for instance, recently posted an average weight loss of up to 20.8% in patients with type 2 diabetes who were overweight or obese in an 80-week phase 3 study.
That's impressive considering people with diabetes have a harder time losing weight, but retatrutide could be highly effective at helping them do so, largely thanks to the fact that it works by activating three natural hormone pathways (compared to either one or two for most approved therapies) that help people eat less, burn more calories, and better control their blood sugar.
Retatrutide is just one example of Eli Lilly's deep pipeline in this area, which could help it ride the weight-loss tailwind over the next five years. And even beyond this market, Eli Lilly has a large pipeline in other areas, as well as other blockbusters in its approved portfolio. Eli Lilly has been one of the top-performing pharmaceutical giants in recent years, and should remain so. The stock is a no-brainer buy.
Intuitive Surgical has faced headwinds in recent years, including increased competition, tariffs, and lower margins on the newest version of its da Vinci surgical system. The company's shares have significantly underperformed the broader market, declining by 33% over the past 12 months. However, Intuitive Surgical's medium-term prospects remain strong, making the current dip a buying opportunity.
Here's why the business is still healthy. Intuitive Surgical's launch of the da Vinci 5 has been hugely successful and presents the company with attractive opportunities, despite its lower margins. This new device lets surgeons feel how much force they're using and runs on a far more powerful computer, advantages which, over time, could enable smarter software, artificial intelligence-assisted surgery, fewer mistakes, and better patient outcomes.
That means additional indications, eventually, and potentially, greater adoption of robotic-assisted surgery (RAS). So, the da Vinci 5's lower margins are worth it once we zoom out and focus on the company's long-term opportunities. It could also help Intuitive Surgical stay ahead of the new competition. The company's da Vinci system already has more than two decades of real-world outcomes to back it up, but it's important to continue innovating, which is what it did with the da Vinci 5.
Further, Intuitive Surgical benefits from a wide moat due to high switching costs, as its expensive devices, which also have a steep learning curve, become far too valuable for hospitals to replace with competitors' devices. That grants the company pricing power, which it might lean on to mitigate the impact of tariffs on its financial results. Intuitive Surgical's stock may remain volatile over the next year or so, but in five years, it could be far above its current levels. Patience will be rewarded.
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Prosper Junior Bakiny has positions in Eli Lilly, Intuitive Surgical, Johnson & Johnson, and Novo Nordisk. The Motley Fool has positions in and recommends AbbVie, Eli Lilly, Intuitive Surgical, Merck, and Novo Nordisk. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.