These 2 Growth Stocks Are Brilliant Buys for the New Year

While many economists predicted a recession in 2023, and macro volatility remains a factor that consumers and investors are still contending with, the grave headwinds many awaited with trepidation have yet to appear. Now, volatility might still lie ahead for many industries and companies, but the wider economy appears to be improving slowly but surely.

If you're looking for stable businesses to put cash to work, healthcare has proved to be considerably less vulnerable to economic fluctuations than other industries over the years. Healthcare companies provide products and services that consumers need regardless of the economy, which helps create a considerable moat for many of these businesses.

On that note, here are two brilliant healthcare growth stocks to consider adding to your buy basket before the month is out.

1. DexCom

DexCom (DXCM -9.90%) is known for its continuous glucose monitoring (CGM) devices, which help diabetics track blood glucose levels to monitor and mitigate adverse blood sugar events. Their use is exploding due to the increased incidence of diabetes worldwide, the growing uses for type 1 and type 2 diabetics (and in some cases, pre-diabetics), and expanded coverage from public and private insurers.

DexCom remains at the forefront of this global market with its latest CGM, the G7, being promoted as the most accurate and most widely covered. According to the American Diabetes Association, it's estimated that as of 2021, roughly 12% of the U.S. population -- 38 million individuals -- were diabetics. This figure included both diagnosed and undiagnosed diabetics.

At that time, it was also estimated that the user base for DexCom's CGM products numbered around 1 million, just a fraction of that patient total. Even as competitive as the diabetes care industry is, it's clear that there is plenty of room for multiple players in domestic and international markets. And it's estimated that approximately 643 million people worldwide will have diabetes by the year 2030.

In December 2022, DexCom's G7 CGM was approved for all diabetics in the U.S. age 2 and older, and launches have occurred in other key markets including the U.K., Europe, Canada, Asia, and Africa.

The G7 is easy to use, according to 96% of wearers, and most users are paying only $20 a month or less for this potentially life-saving device. This global launch has provided a new wave of growth for the business, and it might be just the beginning of the market opportunity for the latest generation of DexCom's CGM.

The addressable market for DexCom is already massive and growing, and insurance reimbursement remains a key needle mover to ensure that more patients can access this technology. Last year, Medicare expanded CGM coverage to diabetics using any type of insulin, which means millions of people who couldn't get coverage for the G7 before now can.

DexCom is also in the process of seeking approval for another CGM called the Stelo, which is based on the G7's underlying technology but geared toward type 2 diabetics who don't take insulin.

Expanding adoption of CGMs in both the type 1 and type 2 segments of the diabetes-care market remains a significant driver of growth. DexCom can directly benefit and is working closely with payers to achieve it. In the first nine months of 2023, the company had revenue of $2.6 billion, up 24% from the prior-year period, with profits rising 14% year over year to $285 million.

Shares of DexCom are trading up by around 20% over the trailing 12 months, in line with the market's broader return during that same period. Now might be an ideal time to scoop up some shares of this mature and profitable business, as its long-term growth opportunity looks to remain substantial.

2. Eli Lilly

Eli Lilly (LLY 1.19%) has been in business for nearly 150 years, and its dividend history stretches back to its first payout in 1885. The yield is a little less than 1% -- a function of the stock's impressive performance as compared to its overall payout ratio.

But the most recent dividend increase was a whopping 15%. Over the trailing decade, Eli Lilly's dividend has risen by an incredible 165%, helping to drive a total return of roughly 1,400%.

The company sells pharmaceuticals across a range of disease treatments, including oncology, diabetes care, and brain disorders. Some of its well-known products include cancer drug Verzenio; diabetes drugs Mounjaro, Jardiance, and Trulicity; and Taltz, which treats psoriatic arthritis and plaque psoriasis. The company is awaiting Food and Drug Administration approval for its long-awaited Alzheimer's drug donanemab, a decision expected this quarter.

Another huge regulatory win for Eli Lilly, and one that follows on the heels of the buzz from Novo Nordisk's Ozempic, was the approval of Zepbound late last year for chronic weight management. Formulaically, Zepbound is the same as Lilly's blockbuster Mounjaro, but one is for weight loss while the other is for diabetes.

Eli Lilly also just boosted its oncology portfolio with the purchase of Point Biopharma in December, a company that develops radiation therapies.

In the third quarter of 2023, Eli Lilly reported just shy of $10 billion in revenue, a 37% boost from its top line in the same quarter in 2022. U.S. revenue jumped 21% year over year, while international revenue soared 64%.

While it reported a net loss of $57 million based on generally accepted accounting principles (GAAP), primarily due to a stream of acquisitions last year, adjusted earnings totaled $95 million for the three-month period.

Eli Lilly is a company at a mature stage in its growth. It benefits from a highly diverse range of drugs that target essential healthcare needs. The combination of its existing portfolio, promising pipeline, and new products that were recently added to its lineup can continue to drive consistent investor returns over time for patient shareholders.