Stocks tend to do well in January, but that's not a good reason to invest this month. Strong returns are not achieved in 30 days. Instead, as long-term investors know, the key is to own great companies that can perform well over the long term. There are many candidates on the market that can achieve this effect. Let’s consider two from the healthcare field: Dexcon (NASDAQ:DXCM) and exact science (NASDAQ:EXAS). Let's discuss why these two companies are worth investing in right now.
DexCom is a leader in the market for continuous glucose monitoring (CGM), or devices that help people with diabetes track blood sugar levels. The company has encountered some issues in 2024, including lower-than-expected revenue growth due to patient rebate eligibility issues. DexCom shares fell after the company released its second-quarter earnings report. Despite the rebound, it is still significantly lower than pre-August levels.
Considering DexCom's long-term prospects, this is a good opportunity to invest in the stock. The adoption of CGM equipment has generated strong revenue and earnings growth for the company in the past. These gadgets offer significant advantages over blood glucose meters. For example, continuous glucose monitoring can automatically measure a patient's blood sugar levels every five minutes, allowing them to make better health decisions every day.
BGM is manually operated and only captures a patient's blood glucose level at one point in time. So it's no surprise that continuous glucose monitoring is associated with better health outcomes. Additionally, DexCom still has significant gaps in the industry. Even in the United States, where CGM penetration is higher than in most other countries, the number of patients using CGM still lags behind the total population covered by insurance. DexCom estimates the total addressable market in the United States at 25 million people, a small fraction of the global diabetes population.
It's also worth pointing out that DexCom has expanded beyond treating patients with diabetes. The company launched Stelo in 2024, an over-the-counter CGM option for people with prediabetes. Finally, DexCom’s devices are compatible with third-party insulin pens, pumps, and more. This gives the company network effects. Combined with ample room for growth ahead, DexCom should be able to rebound from its recent declines and deliver strong returns for investors who stay the course.
Here's why the stock is a buy this month.
Exact Sciences develops innovative cancer diagnostic tests. The company's most popular brand so far is Cologuard, an at-home, non-invasive test for colorectal cancer, the second-leading cause of cancer death in the world. However, colorectal cancer has high cure rates if detected early, suggesting that not enough eligible patients are being tested. Health experts recommend that people 45 and older get screened regularly. This is Exact Sciences' target market.
Cologuard was first approved in 2014 and has been used to screen millions of patients, generating strong revenue growth for the company. However, Exact Sciences is still unprofitable. In the third quarter, the company's revenue increased 13% year-on-year to $709 million. The company reported a net loss of $0.21 per share after reaching breakeven in the third quarter of 2023. The good news is that last year the U.S. Food and Drug Administration (FDA) approved a new and improved version of Cologuard.
Not only does it perform better than previous iterations - including more true positives and fewer false negatives - but it also costs 5% less to make. So with this new device, Exact Sciences will be able to bring on board many doctors who have so far been hesitant to prescribe Cologuard to their patients. It will also help reduce the company's costs and expenses and increase profits.
There are still 60 million unscreened patients in the U.S. between the ages of 45 and 85, not to mention the various other devices Exact Sciences is developing, including the potential to detect multiple cancers. Exact Sciences is likely to generate stronger revenue growth and become profitable over the next five years, leading to strong stock market performance for the company. Therefore, Exact Sciences is a good choice for healthcare investors.
Ever feel like you missed out on an opportunity to buy the most successful stocks? Then you'll want to hear this.
On rare occasions, our expert team of analysts will publish 'Double Down' Stocks Recommend companies they think will be popular. If you're worried that you've missed out on an investment opportunity, now is the best time to buy before it's too late. The numbers speak for themselves:
NVIDIA: If you invested $1,000 in 2009 when we doubled down, You will have $341,656!*
apple: If you invested $1,000 in 2008 when we doubled down, You'll have $44,179!*
Netflix: If you had invested $1,000 in 2004 when we doubled down, You will have $446,749!*
We're currently issuing "double down" alerts on three companies that are incredible and likely won't be available again anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns as of January 13, 2025
Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends DexCom and Exact Sciences and recommends the following options: long January 2027 DexCom $65 calls and short January 2027 DexCom $75 calls. The Motley Fool has a disclosure policy.
2 Health Care Stocks to Buy in January Hands Over originally published by The Motley Fool