Is Novo Nordisk the best healthcare stock for you?

Novo Nordisk (N)ovo Nordisk ) (NYSE: NVO)is a Danish company whose best-selling diabetes drug Ozempic and anti-obesity drug Wegovy have become among the most valuable companies in the world. The company's value has reached approximately $580 billion, generating significant earnings for its shareholders. In five years, the company's stock price has risen 4,00%.

Investors are encouraged by the fact that there are still a number of growth catalysts that could drive the share price further upwards. Novo Nordisk's growth story isn't over yet. With its strong fundamentals, highly valued assets in Ozempic and Wegovy, and more growth ahead, is this a buy you can make today?primeTherapeutic care stock?

Novo Nordisk has an impressive business.

One of the things I really like about Novo Nordisk is that while other companies are too diversified, Novo Nordisk focuses on weight loss and diabetes. These are two of the most important areas in healthcare. As evidenced by the off-label use of Ozempic for weight loss, there is some overlap between these two areas. A drug that helps in one area will help in the other.

By avoiding over-complication, Novo Nordisk is able to focus on high-growth areas. This helps to improve efficiency and achieve strong long-term growth.

In 2023, the company's total aggregate revenue will reach DKK 232.3 billion (approximately USD 34.8 billion), of which 93% is related to diabetes and obesity care. The remaining DKK 17.2 billion (approx. USD 2.6 billion) comes from the Rare Diseases Division. Excluding the impact of exchange rates, the Diabetes & Obesity Care business grew at a rate of 42%, with the majority of the growth mainly attributable to Ozempic and Wegovy.

Not only is Novo Nordisk experiencing amazing revenue growth, but it is also experiencing very high gross margins. In each of the last five years, the gross margin has been above 83%. This is a very impressive margin that makes it easy for a business to become profitable. Novo Nordisk's margin of 36% last year was the highest in the last five years, but it has never been lower than 31% in that time.

High revenue growth and excellent margins are two solid reasons why this is already a great investment. But if you're looking at the long term, there are even more reasons to stay bullish on this stock.

Novo Nordisk may welcome more catalysts.

Today, Novo Nordisk is doing exceptionally well, but the company is by no means peaking anytime soon; it still has too much growth potential. One example of this is the expansion of the business; one of the big problems with best-selling medicines such as Ozempic and Wegovy is that there is a shortage of supply, and it simply can't keep up with demand.

However, the company is investing to increase its production capacity. Last year, the company announced plans to spend $6 billion on new facilities in Denmark. The investment will last for many years and is not expected to be fully completed until 2029. Earlier this year, Novo Nordisk's parent company, Novo Holdings, announced a $16.5 billion deal to acquire drug makerCatalent). Under the plan, Novo Nordisk will purchase three production sites from the parent company for US$11 billion.

By increasing capacity, Novo Nordisk will be better able to meet further surges in demand for its products, as studies have shown that Novo Nordisk's medicines can be used in more areas than just the initially approved indications.

In March, the U.S. Food and Drug Administration (FDA) approved Wegovy as a therapeutic drug to help obese and overweight adults reduce their risk of heart attack or stroke, and Ozempic has been shown to help reduce the risk of kidney disease progression in a clinical trial. The drug is not yet approved for this indication, but as more research reveals the effectiveness of these drugs in other potential areas, the FDA may approve more indications. This will help to increase demand.

Ozempic and Wegovy aren't the only ones that look promising, and another drug that should be familiar to Novo Nordisk investors is amycretin, which is still in the early stages of testing, but so far the results have been encouraging. It has been shown to help patients lose weight, and may be more effective than Wegovy as a weight-loss drug. It's still early days - that's based on the first phase of trial data - but this is another drug that investors should keep a close eye on. If amycretin becomes a real drug, then Novo Nordisk may have another solid income-generating asset in its portfolio.

For which investors is Novo Nordisk the best Materia Medica stock to buy?

If your focus is on finding a good growth healthcare stock that you can buy for the long term without too much risk to your portfolio, then I think Novo Nordisk is the best healthcare stock to buy right now. Competitorscome with a giftIt is a possible option, but Novo Nordisk is cheaper (P/E of 48x vs. Lilly's P/E of more than 130x) and its business is not as diverse and complex as Lilly's. In the long run, Novo Nordisk's leaner, more focused focus on obesity and diabetes could lead to greater upside for Novo Nordisk.

Should you invest $1,000 in Novo Nordisk now?

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David Jagielski does not own any of the aforementioned stocks.The Motley Fool recommends Novo Nordisk.The Motley Fool has a disclosure policy.

Is Novo Nordisk the best healthcare stock for you? This post was originally published by The Motley Fool.