So, Eli Lilly (LLY 0.86%). A pharmaceutical company, yes, but these days it feels less like a maker of medicines and more like a purveyor of…well, let’s just say solutions to a problem a surprising number of people have. The stock, as you may have noticed, has been doing rather well, though it’s had a bit of a wobble recently, down around 15% this year. Which, in the grand scheme of things, isn’t quite falling off a cliff, but enough to make you wonder if it’s a good time to “buy the dip,” as the financial types say. It’s currently the most valuable company in the U.S. healthcare sector, a fact that seems both impressive and slightly alarming, like discovering your neighbor has quietly become a billionaire.
The source of all this excitement? Weight loss drugs. Specifically, Mounjaro and Zepbound. Now, people have been trying to lose weight since, well, probably since there was weight to lose. But these aren’t your grandmother’s diet pills. These are serious medications, and they’re having a serious impact on Lilly’s bottom line. In 2025, these two drugs are expected to account for a whopping 56% of total revenue. That’s…concentrated. It’s a bit like building a skyscraper on a single foundation. Impressive, perhaps, but also potentially precarious.
Lilly’s market cap briefly exceeded a trillion dollars, which is a number so large it’s almost meaningless. It’s more money than anyone could reasonably spend in several lifetimes. The stock is currently trading at a price-to-earnings ratio of 40.1, which is, let’s be honest, rather lofty. A forward P/E of 26.1 is more reasonable, assuming continued growth, but it all hinges on these weight loss drugs. If demand continues, Lilly could look like a bargain. But if the market shifts, or a better alternative emerges, well, let’s just say the stock price could experience a rather significant correction. It’s the eternal gamble of investing, really.
An ETF for the Slightly Less Daring
Now, if you’re the sort of person who prefers a little diversification, a little spreading of the risk, you might consider the Vanguard Healthcare ETF (VHT 0.12%). It’s not quite as exciting as betting everything on a single company, but it’s arguably a more sensible approach. It holds over 400 stocks, including a sizable 12.6% weighting in Eli Lilly. So, you still get a piece of the action, but you’re not entirely at the mercy of a single drug’s success.
Think of it like this: you could go all-in on a single horse in the Kentucky Derby, or you could buy a share in the entire racing stable. One has the potential for a huge payoff, but also a much higher risk of ending up with nothing. The other is a more measured, less dramatic approach. The ETF currently sports a P/E of 25.3 and a yield of 1.6%, which is a slightly better value and provides a little extra income compared to the Vanguard S&P 500 ETF. Small differences, perhaps, but they add up over time.
And the expense ratio? A mere 0.09%. That means for every $1,000 you invest, you’ll pay less than a dollar in fees. Which, in the grand scheme of things, isn’t bad at all. It’s like paying a tiny toll to travel on a well-maintained highway.
Eli Lilly could still be a good buy for those who are confident in its long-term prospects. But for those who prefer a little more balance, a little more peace of mind, the Vanguard Healthcare ETF is a perfectly sensible option. It’s not glamorous, perhaps, but then again, sensible investing rarely is.
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2026-03-24 19:36