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Diabetes Epidemic Makes this Stock a Strong Buy

Diabetes is a growing concern as more of the globe becomes modernized and with that is eating a diet that too often is a road to diabetes. Gladly there are drug companies at the forefront of this movement to stem the tide like Novo Nordisk (NVO) making it a very appealing stocks in the years ahead. Read on below for the full story….

As economies in the so-called emerging world become more Westernized, healthcare professionals around the world are growing more concerned about the health of the populace.

As populations' dietary habits change, more and more people are becoming overweight. This, in turn, is leading to a dramatic rise in cases of diabetes. Consider that the ailment is the ninth-leading cause of death globally, according to the World Health Organization. 

And if sugar in the bloodstream remains high in a person, it can damage blood vessels. This increases the risk of developing complications, such as hardening of the arteries. Cardiovascular diseases are the leading cause of death globally.

While sad, rising cases of diabetes does present us an excellent opportunity to find some high-quality stocks that are combating these diabetes trends. 

Diabetes Soaring in Asia and Africa

The International Diabetes Federation's (IDF) 2021 Diabetes Atlas made for some scary reading. 

The harsh reality, according to the IDF is that 3 in 4 adults with diabetes live in low- and middle-income countries. Many of these nations are found in the densely populated nations in Asia and Africa.

And there's more. . . . .

  • 537 million adults (20-79 years) are living with diabetes - 1 in 10. This number is predicted to rise to 643 million by 2030 and 783 million by 2045. 
  • 541 million adults have Impaired Glucose Tolerance (IGT), which places them at high risk of type 2 diabetes

In Africa, the IDF says 1 in 22 adults (24 million) adults are living with diabetes. And over 1 in 2 (54%) people living with diabetes are undiagnosed. Finally, 1 in 8 live births are affected by high blood sugar in pregnancy.

In Southeast Asia, 1 in 11 adults (90 million) are living with diabetes. And over 1 in 2 adults living with diabetes are undiagnosed. The number of adults with diabetes is expected to reach 113 million by 2030 and 151 million by 2045.

So it should not come as a shock that the total number of diabetes patients in Asia and Africa is forecast to reach 560 million by 2045, up 50% from 2021, according to the IDF. The number is projected to rise 70% to 220 million in South Asia, while sub-Saharan Africa is expected to see a 2.3-fold jump to 55 million people. 

With so many cases of diabetes currently untreated in Africa and Asia, this translates to a vast untapped market for treating the disease.  

It makes this particular healthcare subsegment – treating diabetes – a true growth story. That leads to the company I want to bring to your attention.

Number 1 in Diabetes Treatments: Novo Nordisk

Novo Nordisk A/S (NVO) is a global healthcare company, founded in 1923, and headquartered in Denmark. Its focus is on diabetes and other serious chronic diseases, such as obesity.

The company is THE global powerhouse in diabetes treatment, with about 30% of the $50+ billion global diabetes market and around half of the $20 billion insulin therapy market.

Of course, there are competitors anxious to eat into the company's market share. These include the other two major insulin producers – Eli Lilly (LLY), POWR Rating B, and Sanofi (SNY), also POWR Rating B. It is interesting to note that, in the related weight loss sector, Lilly is also battling Novo Nordisk to be the top player.  

The prevalence of diabetes is expected to soar in the coming decades, as a result of an increasingly

overweight and aging global population. That will only benefit all of the diabetes-related firms in diabetes (and obesity) treatments. 

But with a solid portfolio of GLP-1 products, including Ozempic and Rybelsus, Novo Nordisk is well positioned to defend its diabetes market share and even grow it. 

NVO has a POWR Rating of A or Strong Buy. On top of that the Quality Rating is also A where is ranks ahead of 98.3% of other US stocks. 

The company has a market capitalization of $272.13 billion, with a dividend yield of 1.12%. It had its IPO on January 1, 1986 on the NYSE, making it older than 93.61% of US equities in our universe. 

While Novo Nordisk trades at about 40 times current earnings, it trades at 32 times next year’s forecast earnings (far cheaper than many of its rivals). Its 52-week range is from $95.02 to $172.97.

Currently 30 Wall Street analysts regularly analyze the financials of Novo Nordisk on a frequent basis to provide recommendations, along with target share price. The 30 analysts offering 12-month price forecasts for NVO have a share price target of $177.48.

This is far too conservative. . . . .

I believe NVO stock will be a big winner, outperforming its peer group by a large margin – as it did during the past decade. It would surprise me to see NVO's stock doubling over the next 18 months. That's why I prefer just owning Novo Nordisk in the diabetes sector.

The stock is trading around $160 a share, up about 48% over the past 52 weeks and 16.5% year-to-date. It's a buy in the $155 to $175 range.

What To Do Next?

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shares were trading at $440.92 per share on Friday afternoon, down $1.68 (-0.38%). Year-to-date, has gained 15.73%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Tony Daltorio

Tony is a seasoned veteran of nearly all aspects of investing. From running his own advisory services to developing education materials to working with investors directly to help them achieve their long-term financial goals.


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