Unleashing the power of DNA has been a ticket to success for Exact Sciences (EXAS 1.20%) and Illumina (ILMN 2.69%). Exact Sciences' Cologuard DNA test for colorectal cancer is rapidly gaining momentum. Meanwhile, Illumina's gene-sequencing systems have established the company as a powerhouse in the industry.

Over the last year, Exact Sciences has been a bigger winner when it comes to stock performance, with its shares recently hitting all-time highs. But which of these stocks is the better pick for long-term investors? 

A dart piercing a DNA helix to hit a bull's-eye.

Image source: Getty Images.

The case for Exact Sciences

Probably the strongest argument for buying Exact Sciences shares is that it's still in the early innings for Cologuard. There are several reasons why sales should continue to skyrocket for the DNA colorectal cancer test.

First and foremost, there's a huge untapped market. Despite the impressive sales growth for Cologuard, it has only captured a market share of around 4%. Many individuals who should be screened for colorectal cancer aren't, primarily because they're averse to the inconvenience and invasiveness of colonoscopies. Exact Sciences thinks that it can eventually boost its market share to 40%.

The potential market for Cologuard is also likely to grow significantly. Last year, the American Cancer Society revised its guidelines to recommend the minimum age for colorectal cancer screening be lowered from 50 to 45. Exact Sciences plans to submit for FDA approval of a label expansion to allow Cologuard to be used in screening the group of patients between the ages of 45 and 50 within the next three months. The company thinks that securing this label expansion will open up an additional addressable market of $4 billion annually.  

Exact Sciences is in a better position than ever to target key physicians who are candidates for prescribing Cologuard thanks to its partnership with Pfizer. The first few months of the big drugmaker's sales force promoting Cologuard has been a tremendous success. Exact Sciences and Pfizer plan to especially focus on reaching large health systems and OB-GYNs this year.

A new and improved version of Cologuard is in the works. Exact Sciences CFO Jeff Elliott said in the company's Q4 conference call in February that the new version of the test could enable the company to grow U.S. revenue by at least 5% to 10% and should reduce cost of goods as well.

There's also another important development effort underway. Exact Sciences is working with the Mayo Clinic to develop liquid biopsies for early detection of multiple types of cancer. Their researchers have already made significant progress in developing a more accurate DNA test for liver cancer. Over the long run, liquid biopsies could become a bigger opportunity than Cologuard for Exact Sciences.

Check out the latest earnings call transcripts for Exact Sciences and Illumina.

The case for Illumina

We can use a baseball analogy for the primary reason to buy Illumina stock, too. Gene sequencing isn't just in its early innings; it's more like the first at-bat.

Illumina CEO Francis deSouza mentioned three intriguing statistics at the J.P. Morgan Healthcare Conference in January. He said that less than 0.01% of animal species have had their genomes sequenced and that less than 0.02% of human genomes have been sequenced. DeSouza also stated that less than 1% of variants in the human genome have been fully characterized. The bottom line: There's a long, long way to go -- and a huge potential market for gene sequencing.

You could make a good case that Illumina is likely to be a major player in reaching that huge market. The company is already the undisputed leader in gene sequencing. Its systems have been instrumental in dramatically reducing the costs of sequencing a human genome. Illumina thinks that its NovaSeq system can help cut the cost even more, from around $1,000 today to $100 in the not-too-distant future.

There are multiple markets with tremendous growth prospects for Illumina. The popularity of consumer genomics began with ancestry research but is quickly expanding to health-related genetics. Noninvasive prenatal testing (NIPT) is becoming widely adopted. Countries across the world have initiated population genomics efforts that involve sequencing hundreds of thousands of human genomes. Drugmakers are focusing more and more on personalized medicine. Researchers are trying to better understand rare and undiagnosed diseases (RUGD).

As you might expect, Illumina is already a leader in each of these areas. The company's customers include several of the top consumer genomics providers, including Ancestry, 23andMe, and Illumina's own Helix spinoff. Illumina's VeriSeq is a leading NIPT product. Its high-throughput gene-sequencing systems are being used in several major population genomics projects. And those are just a few examples of Illumina's industry leadership.

Liquid biopsies could be a huge market for Illumina as well. GRAIL, another Illumina spinoff, is working to develop a liquid biopsy for the early detection of multiple types of cancer. Illumina is developing a version of its TruSight Oncology cancer test that uses blood rather than tissues. Regardless of which companies are successful in developing liquid biopsies, there's a good chance that the sequencing used will be performed using Illumina's technology.

Better buy

I have liked both Exact Sciences and Illumina for a long time. But if I had to choose just one of these stocks, it would be Illumina.

It's certainly helpful that, unlike Exact Sciences, Illumina is already very profitable. I also like that nearly 65% of Illumina's total revenue comes from sales of consumables (chemicals used in gene sequencing). The company's growth prospects continue to be very good and will probably get even better in the future.

Sure, competition will likely heat up in the gene-sequencing industry. Illumina faces both large and small rivals. However, with Illumina's pending acquisition of Pacific Biosciences of California giving it a new complementary technology, and its continued investments in research and development, I think that Illumina will remain a winner over the long run.