Stocks tend to do well in January, but that’s not a good reason to invest this month. Strong returns are not achieved in a single 30 day period. Instead, as long-term investors know, the key is to stick with blue-chip companies that can perform well over the long term. There are several candidates for this effect on the market. Let’s think about two in the healthcare sector: Dexcom (Nasdaq: DXCM) and Exact sciences (NASDAQ:EXAS). Let’s discuss why these two companies are worth investing in now.
DexCom is a leader in the market for continuous glucose monitoring (CGM), or devices that help diabetics track their blood glucose levels. The company faced some issues in 2024, including slower-than-expected revenue growth due to patient discount eligibility issues. DexCom Shares He fell off the cliff After it released its second quarter earnings report. Although they have rebounded somewhat, they are still significantly below pre-August levels.
Considering DexCom’s long-term prospects, it’s a good opportunity to invest in the stock. Adoption of continuous glucose monitoring (CGM) devices has provided a supportive catalyst for the company in the past, resulting in strong revenue and earnings growth. These tools have significant advantages over blood glucose meters. For example, continuous glucose monitors can automatically measure patients’ glucose levels up to every five minutes, allowing them to make better health decisions every day.
BGMs are manually operated and only capture patients’ glucose levels at one time. It’s no surprise, then, that continuous monitoring is associated with better health outcomes. Moreover, DexCom still has a lot of white space in the industry. Even in the United States, where CGMs are more widespread than in most other countries, the number of patients using CGMs still lags behind the overall covered population. DexCom estimates that the total addressable market is 25 million people in the United States, which is just a small portion of the global population with diabetes.
It’s also worth noting that DexCom has expanded beyond treating diabetes patients. Launched in 2024, Stelo is an over-the-counter CGM option that can be used by people with diabetes. Finally, DexCom devices are compatible with insulin pens, pumps, etc. This gives the company Network effect. This, coupled with a broad path for future growth, should allow DexCom to rebound from its recent decline and generate excellent returns for investors who stay the course.
That’s why the stock is a buy this month.
Exact Sciences develops innovative cancer diagnostic tests. The company’s most popular brand by far is Cologuard, a non-invasive at-home test for colorectal cancer, the second leading cause of cancer death in the world. However, colorectal disease is highly treatable when detected early, which suggests that not enough testing is done for eligible patients. Health experts recommend regular checkups for people aged 45 or older. This is Exact Sciences’ target market.
Cologuard, which was first approved in 2014, has been used to screen millions of patients, leading to strong revenue growth for the company. However, the exact sciences remain unprofitable. In the third quarter, the company’s revenue rose 13% year over year to $709 million. The company reported a net loss per share of $0.21 after breaking even in the third quarter of 2023. The good news is that last year, the US Food and Drug Administration (FDA) approved a new and improved version of Cologuard.
Not only does it perform better than the previous version – including more true positives and fewer false negatives – but it is also 5% cheaper to manufacture. So, with this new device, Exact Sciences will be able to onboard many doctors who have so far been reluctant to prescribe Cologuard to their patients. It will also help reduce the company’s costs and expenses and boost the bottom line.
There are still 60 million unscreened eligible patients between the ages of 45 and 85 in the United States, not to mention various other devices being developed by Exact Sciences, including a potential test for multiple cancers. Exact Sciences could achieve stronger revenue growth and become profitable in the next five years, leading to strong stock market performance for the company. So, Exact Sciences is a good choice for healthcare investors.
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Prosper Junior Bikini He has no position in any of the stocks mentioned. The Motley Fool recommends DexCom and Exact Sciences and recommends the following options: long $65 January 2027 calls on DexCom and short $75 January 2027 calls on DexCom. The Motley Fool has Disclosure policy.
2 Healthcare Stocks to Buy Fist in January Originally published by The Motley Fool