Stocks of biopharmaceutical companies making diabetes drugs haven't been huge winners in 2018 so far. But it's a much different story for medical device companies that focus on monitoring and treating diabetes. Several of these stocks soared in the first half of the year.

Which were the biggest winners? Tandem Diabetes Care (NASDAQ:TNDM), DexCom (NASDAQ:DXCM), and Senseonics Holdings (NYSEMKT:SENS) stocks enjoyed tremendous success during the first six months of 2018. Here's why these are the three best diabetes stocks of 2018 so far -- and if they're still smart picks for investors.

Physician writing the word diabetes

Image source: Getty Images.

1. Tandem Diabetes Care

Tandem Diabetes Care focuses on developing and marketing insulin pumps. Its stock has skyrocketed close to 790% so far this year.

There have been two key catalysts for Tandem in 2018. One is the company's continued financial improvement. Tandem reported a 42% year-over-year jump in sales in its Q1 results announced in April. The company's t:slim X2 insulin pump was the star performer. Tandem's sales have been boosted by the exit of Animas from the insulin pump market in Oct. 2017.

The other big catalyst for Tandem was Food and Drug Administration approval in June for the company's t:slim X2 insulin pump with Basal-IQ technology. This Basal-IQ technology uses algorithms to predict 30 minutes into the future where insulin levels will be. It then adjusts insulin delivery based on the predictions.

Tandem anticipates launching the new product in August. Integration with DexCom's G6 continuous glucose monitoring (CGM) system should especially help make the new t:slim X2 insulin pump a success. With both sales and gross margins growing, Tandem hopes to reach breakeven cash flow by the second half of 2019. 

2. DexCom

While Tandem Diabetes Care handles delivering insulin into patients' bloodstreams, DexCom makes the CGM systems that monitor blood sugar levels for determining when insulin is needed. DexCom stock is up close to 70% year to date.

The reasons behind DexCom's tremendous stock performance are similar to those of Tandem. DexCom announced FDA approval of its new G6 CGM on March 27. Shares had already been rising in the weeks leading up to the announcement in anticipation of the approval decision. 

On May 3, DexCom stock soared again after the company reported Q1 results that were better than analysts expected. DexCom also increased its full-year 2018 revenue guidance by $20 million. 

DexCom has been a leader in continuous glucose measurement, but its G6 system should greatly improve the company's competitive position. Unlike previous CGMs, the G6 requires no finger sticks and no calibration. Its integration with other leading devices, including Tandem's insulin pump, should add to its appeal.

3. Senseonics

Senseonics is much smaller than DexCom, but the company hopes to be just as successful with its own CGM system. Its stock has jumped nearly 60% higher so far this year.

Like both Tandem and DexCom, regulatory approvals have been the keys for Senseonics stock's success thus far in 2018. In February, Senseonics announced European approval and a launch in European markets for its Eversense CGM system. The system includes a sensor implanted beneath the skin with a transmitter worn over the sensor that sends data to an app on a smartphone.

The company also announced in June that the FDA had approved the Eversense CGM system. This followed an advisory committee's unanimous vote in March recommending approval for the system. That vote played a role in prompting Guggenheim analyst Christopher Pasquale to hike his price target for Senseonics to $6 per share in early April -- resulting in a nice bounce for the stock.

Senseonics thinks that Eversense CGM will be attractive to customers for a couple of key reasons. The company claims that its CGM has a higher accuracy than other systems. Senseonics also believes that individuals with diabetes will prefer an implanted sensor that lasts up to 80 days instead of having weekly sensor insertions required by other CGM systems.

Are they still buys?

I wouldn't necessarily count on these three stocks producing gains in the second half of 2018 as they have in the first half. However, I think that Tandem, DexCom, and Senseonics could continue to be winners over the long run.

The diabetes market is enormous. Each of these companies provides innovative products that should achieve solid commercial success. I think Tandem could give medical device giant Medtronic a run for its money. In my view, the CGM market is large enough for several companies to succeed, including both DexCom and Senseonics.

Senseonics is the riskiest of the three, since it's just getting started with commercialization of Eversense. Still, I like the prospects for all three of these stocks.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of Medtronic. The Motley Fool has a disclosure policy.