3 Reasons to Buy Vertex Pharmaceuticals Stock Like There's No Tomorrow

The three major indexes slid in March and April as investors worried about the impact of President Donald Trump's import tariffs on the economy -- but in recent weeks, optimism about lower, more manageable tariff levels has grown. Trump struck a deal with the U.K. and has signed an initial agreement with China, signs that the impact of tariffs may be limited.

And this has helped the S&P 500, (SNPINDEX: ^GSPC), the Nasdaq Composite (NASDAQINDEX: ^IXIC), and the Dow Jones Industrial Average (DJINDICES: ^DJI) rebound from lows. At the same time, many members of these indexes still are trading at reasonable levels, making now a great time to go bargain hunting. In fact, one stock actually bucked the trend of the market, climbing through the worst of the tariff turmoil, but in recent weeks has tumbled, offering us an opportunity to buy on the dip.

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This stock is Vertex Pharmaceuticals (NASDAQ: VRTX), a biotech that's delivered a long track record of growth and profitability thanks to its leadership in the cystic fibrosis (CF) treatment market. The company has slipped 14% in May, though, after an earnings disappointment -- an illegal generic CF drug in Russia hurt sales in the latest quarter. This is not an issue that will disrupt long-term growth, though, so let's check out three reasons why you should buy shares of Vertex like there's no tomorrow.

Image source: Getty Images.

1. Vertex is a tariff safe haven

As mentioned, the import tariff situation looks less daunting now than it did several weeks ago. Still, uncertainty remains, as the U.S. still must reach agreements with many countries worldwide -- and we don't know the tariff levels that will be set as part of those agreements. So that's why it's a great idea to invest in a company or two that doesn't heavily rely on imports -- and therefore doesn't face a huge headwind here.

Vertex is an ideal tariff-proof stock, since the company produces most of its CF drugs in the U.S. The company also says its supply chain is balanced, and it has very little exposure to China. On top of this, it's important to keep in mind that CF treatments are ones patients truly need -- so Vertex's revenue should remain strong regardless of the economic situation.

2. A new era of growth is just beginning

Vertex has built its earnings thanks to its CF program, and with a new CF drug approved a few months ago, the company may be on the road to a new era of growth. Alyftrek has surpassed Trikafta, Vertex's current blockbuster, when it comes to performance -- and the company says initial launch trends have been positive.

But this isn't the only new growth driver for Vertex. The company also recently won approval for what could lead to a new multibillion-dollar franchise: Journavx, a non-opioid painkiller. The common problem of pain has faced limited treatment options: over-the-counter options that don't always work, and prescription opioids that come with the risk of addiction.

Vertex's Journavx offers patients and doctors an attractive option that has performed well in clinical trials. It's now approved for moderate-to-severe acute pain, and Vertex aims to win approval in chronic pain indications down the road. We should see Journavx contributing to growth this year as the launch takes off.

3. The stock is a bargain today

Vertex's recent declines have left the stock trading at 24x forward earnings estimates, down from more than 28x just a few weeks ago. This is a fantastic entry point, considering the new drugs that should add to growth in the coming quarters.

Of course, even at these levels, Vertex isn't the cheapest stock on the block, but it's worth this valuation due to its dominance in the CF market and how that's translated into sustained revenue growth. Vertex also has ensured this leadership with innovation, and the release of Alyftrek should keep it well ahead of rivals. In fact, Vertex's biggest CF rival is... Vertex.

And the company's entrance into the pain management market may be a game-changing moment, opening the door to a huge new revenue stream. The pain management drug market is expected to reach about $125 billion less than 10 years from now, according to Precedence Research. And considering the lack of options, as mentioned, Vertex's Journavx could take significant market share.

All this makes Vertex look like a bargain right now -- and at this level, you may want to buy shares like there's no tomorrow.

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Adria Cimino has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.