Prosper Junior Bakiny, The Motley Fool

Fri, May 30, 2025, 7:00 AM6 min read

• Novo Nordisk has strengths, including a deep pipeline, that should help it overcome recent obstacles.

• Cava Group's results are excellent, and in the long run the restaurant chain still has strong potential.

• 10 stocks we like better than Novo Nordisk ›

It won't come as a surprise to anyone to hear that quite a few quality stocks have performed terribly this year. Some have encountered company-specific problems, others have been swept up in the market's volatility, and for others still, it's a combination of the two.

While broader equities may remain unpredictable in the short term, now might be as good a time as any to pick up shares of top companies on the dip. Novo Nordisk (NYSE: NVO) and Cava Group (NYSE: CAVA) are excellent choices.

Novo Nordisk's shares have significantly lagged the market in the past year due to a series of issues. The Denmark-based drugmaker faced significant clinical setbacks while its main competitor in the market for diabetes and obesity medicines, Eli Lilly, continued to record critical clinical wins.

Furthermore, Novo Nordisk's financial results, though strong compared to most of its similarly sized peers, failed to meet investors' and analysts' expectations. You might argue that Novo Nordisk's sell-off over the past 12 months was justified, but its shares now look far more attractive.

The healthcare giant has a forward price-to-earnings (P/E) ratio of 18 as of this writing, down from more than 40 a year ago; the average for the industry is 15.8.

It's impossible to predict how Novo Nordisk will perform in the short run. Between trade wars and looming economic problems, the company may face additional issues beyond its control that could sink its share price. But for investors willing to hold onto the stock for a while, Novo Nordisk is a great pick.

Wegovy and Ozempic, the company's obesity and diabetes medicines, continue to perform well. The company is also seeking approval for an oral version of semaglutide (the active ingredient in both drugs) to help counter Eli Lilly's orforglipron, an oral GLP-1 medicine that recently aced a late-stage study.

Novo Nordisk has a deep pipeline in its core area of expertise, with various weight management and obesity candidates across all stages of clinical trials. Its string of disappointing clinical trial results was only so because of its stature and the high expectations placed on the company.

CagriSema, a GLP-1 medicine it developed, produced a mean weight loss of 22.7% in a phase 3 study. That was higher than semaglutide in the same study, and also better than what Eli Lilly's Zepbound delivered in a similar trial -- but it was lower than the 25% management had promised. However, the company's significant experience in developing drugs in this area should help turn things around.