Best Growth Stock to Buy Right Now: Eli Lilly vs. Vertex Pharmaceuticals

Eli Lilly (NYSE: LLY) and Vertex Pharmaceuticals (NASDAQ: VRTX) have several things in common. Both are among the more prominent drugmakers in the world, and both have delivered market-beating returns over the past decade, although the larger Eli Lilly has performed much better on that front. Investors choosing between these two stocks can hardly go wrong, but which will be the better performer over the next five to 10 years? Let's try to answer that question.

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The case for Eli Lilly

Eli Lilly currently leads the rapidly growing weight-loss market. The company's tirzepatide, sold under the brand name Zepbound, is now the world's best-selling drug. Over the next two years, the pharmaceutical leader should add several weight loss products to its lineup. The company is gearing up to launch orforglipron, an oral GLP-1, which could earn the green light in the second quarter. The healthcare giant also posted strong phase 3 results for retatrutide, another promising weight-loss candidate, in December.

Meanwhile, Eli Lilly's newer approvals in other fields should also make headway, including Kisunla for Alzheimer's disease and Ebglyss for eczema. They won't be the company's main growth drivers, but they will help somewhat diversify its lineup. Lastly, Eli Lilly is looking to boost its already strong innovative engine by investing in artificial intelligence (AI). The company's lineup should drive top-line growth for the foreseeable future, while its AI initiatives help strengthen its moat.

The case for Vertex Pharmaceuticals

Vertex Pharmaceuticals generates strong sales and profits thanks to its medicines that treat the underlying causes of cystic fibrosis (CF), the only such drugs on the market. While this business remains strong, the company has expanded. Over the past few years, Vertex Pharmaceuticals has earned approval for Casgevy, a treatment for sickle cell disease, and Journavx, a medicine for acute pain. Vertex Pharmaceuticals is looking to further diversify its lineup. It recently reported strong phase 3 results for povetacicept, an investigational therapy for IgA nephropathy, a kidney disease.

The company is planning to build a kidney disease franchise around povetacicept -- with which it will target other diseases -- and inaxaplin, which is being developed to treat APOL-1 mediated kidney disease. Then there is zimislecel, a potential therapy for Type 1 diabetes for which Vertex could request regulatory approval this year. The biotech's core CF franchise can still drive top-line growth well into the 2030s. After that, newer approvals will eventually help the company move beyond its CF business.

The verdict

If I could only choose one of these stocks, I'd pick Eli Lilly. The company is generating higher revenue and net income while also growing both metrics faster than its smaller competitor.

LLY Revenue (Quarterly) data by YCharts

Further, even as the weight-loss market becomes more competitive, Eli Lilly's deep pipeline should help it keep the lead in this growing niche. Lastly, both companies are similarly valued, with Vertex's forward price-to-earnings ratio of 24.2 not much lower than Eli Lilly's 26.9. Perhaps if Vertex were much cheaper, it would be the better option right now, but it's not, which gives Eli Lilly the edge.

Prosper Junior Bakiny has positions in Eli Lilly and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.