Investing in the stock market is never without risk, but great companies with clear growth paths can thrive despite short-term chaos. If you are looking for profitable, growth-oriented companies that have a track record of expanding across a variety of economic cycles, look no further.
Today we take a look at two fast-growing healthcare stocks that are not only leaders in their respective markets, but also have plenty of growth potential for long-term investors to benefit from.
1. Vertex Pharmaceuticals
Apex Pharma (VRTX 0.56%) has built a profitable and high-revenue growth business around a relatively small drug portfolio. However, these drugs all have one thing in common: They are the only products currently on the market that address the underlying cause of genetic cystic fibrosis.
Combined, these four products brought combined sales of $9 billion in 2022, up 18% from 2021. Net income for the 12-month period totaled $3.3 billion, up 42% % compared to the previous year. This follows the most recent three-year period in which the company’s annual sales and net income grew 44% and 23%, respectively.
While the addressable market for Vertex’s existing portfolio of cystic fibrosis drugs is huge — management estimates as many as 20,000 people worldwide could benefit from the company’s products but are not yet taking them — and additional indications for these drugs are expanding the patient population the company is looking for new sources of growth. It currently has an impressive pipeline of products that cover disease areas ranging from rare blood disorders to type 1 diabetes to acute pain.
In the company’s 2022 earnings call, CEO and President Reshma Kewalramani said each of its mid- to late-stage clinical pipeline candidates “has the potential to be best-in-class and transformative of the disease, and each represents a multi-billion dollar market above and beyond.” Additionally, we see an opportunity to bring new products to market in five of these disease areas within the next five years or our five out of five goal.”
For investors looking for a high-growth, profitable healthcare company that’s only in the early days of its overall expansion strategy, Vertex Pharmaceuticals is a prime candidate for a long-term position in both bull and bear markets.
2. DexCom
DexCom (DXCM -2.13%) capitalized on its recent win, US approval of its latest continuous glucose monitoring (CGM) device and a remarkable year of growth and profitability for the company. The latest version of its flagship CGM, the G7, is currently being launched in the US, with launches already underway in key markets outside the country.
The G7 is 60% lighter than its predecessor, the G6 CGM, and has already received overwhelmingly positive reviews from wearers. In fact, 97% of first-time wearers have reported how easy the G7 is to use. Meanwhile, DexCom just announced that the G7 will be insured for eligible Medicare beneficiaries, ensuring it’s the best-covered CGM device currently on the market.
2022 was a successful year for DexCom in many ways. The company increased its user base by 450,000 people and ended the 12-month period with a total of approximately 1.7 million CGM users worldwide. Revenue and net income for the 12-month period were $3 billion and $341 million, respectively, up 19% and 57% year over year.
The market for CGMs continues to grow as the prevalence of diabetes increases worldwide. And while most CGM carriers are Type 1 diabetics, not only is this market still under-penetrated (there are more than 8 million people with Type 1 diabetes worldwide), but there is a growing market opportunity for DexCom to reach people with type 2 diabetes to reach most common form of the disease and possibly even prediabetes.
Despite the fact that DexCom remains a global CGM leader, there is tremendous scope for the healthcare company to expand over the coming years and increase shareholder returns in the process.
Rachel Warren has positions at DexCom. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy.
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