The first human genomes were mapped and sequenced around 18 years ago. Since then, Illumina (ILMN -1.36%) has led the pack when it comes to making the practice faster and cheaper.

Illumina made the process so inexpensive that scientists regularly sequence cancerous tumors to see which mutations are driving their growth. Guardant Health (GH 2.51%) makes this process simple enough to regularly screen for cancer and inform treatment decisions when it's present.

Person making a decision that could go one of two ways.

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Which one of these stocks will rise furthest in the years ahead? Read on to find out.

The case for Guardant Health

Unless you've got skin cancer, harvesting a sample of tumor DNA generally involves an expensive and risky surgical procedure. That's why Guardant Health's lead product, Guardant360, is increasingly popular among oncologists who want to select the best available course of treatment for their patients.

When it comes to difficult tissue biopsies, it's often hard to retrieve a large enough sample to screen for a handful of possibilities. All it takes to screen for 73 cancer genes with Guardant360 is a single vial of blood.

There are roughly 700,000 people with advanced-stage cancer that will receive two tissue biopsies on average. Guardant thinks there's a $4 billion market opportunity from this population alone. The company also markets a similar test called GuardantOMNI, which sports a broad 500-gene panel that's increasingly popular among companies running clinical trials for highly targeted experimental therapies aimed at genetically defined groups of patients.

The market for treatment-guiding liquid biopsies, a catch-all term to describe blood-based cancer screening, is probably large enough to allow Guardant to generate a steady profit, but it's the company's Lunar tests that have driven the stock up 182% since its market debut last October.

Lunar-1 intends to help 15 million solid tumor cancer survivors to keep an eye out for a recurrence without going under the knife. The Lunar-2 program is aimed at an even larger population of healthy people at risk of developing cancer.

During the first three months of 2019, revenue surged to an annualized $147 million, which was 120% higher than a year earlier. Guardant estimates the combined market opportunity for Lunar-1 and Lunar-2 at around $33 billion, which gives the company a lot of room to grow.

Person surrounded by laboratory equipment.

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The case for Illumina

Unlike Guardant, Illumina's been profitable for more than a decade. Over the past year, operations generated an impressive $823 million in free cash flow, and the industry leader has been using those profits to acquire potential competitors.

Illumina's machines read short portions of the human genome before stitching them together. Short-read sequencing is cheap, but it's quickly losing its edge to long-read technology that's become less expensive than anyone expected just a few years ago.

Long-read sequencing can peer into corners of the genome that Illumina's sequencers can't, which means Illumina could quickly lose its grip on the market for human genome sequencing or at the very least have to slash prices to compete. That's why the company announced its intent to acquire the long-read sequencing leader, Pacific Biosciences (PACB 0.27%), last year.

Unfortunately for Illumina, the United Kingdom is doing its best to halt the acquisition in order to support Oxford Nanopore Technologies. The privately held company's low-cost DNA sequences aren't the most accurate, but they're small enough to carry into any field and capable of sequencing genomes on site, without a laboratory.

In 2017, Illumina spun off its liquid biopsy program into a privately held business called Grail. The start-up has already attracted more than $900 million in funding to produce a pan-cancer test that detects every type of early-stage malignancy. Illumina will reap a portion of the rewards if Grail succeeds, and Guardant's focus on individual indications might not work out as planned.

Laboratory employee counting money.

Image source: Getty Images.

The better buy

Guardant Health's revenues are rising fast, but the company is still losing money. Guardant finished March with $493 million in cash after narrowing losses to $26.1 million during the first three months of the year. If investors think there's a chance the company won't turn a huge profit from a larger market for early-stage detection, its $7.9 billion market cap could collapse.

The U.K. probably won't be able to permanently halt Illumina's acquisition of Pacific Biosciences, but thanks in part to Brexit, the European Commission isn't quite sure how to proceed. Once they finally work out the details, Illumina's chance to leap forward with fast, inexpensive single-read technology could evaporate.

Illumina is highly profitable, but investors are expecting tremendous growth in the years ahead. At recent prices, shares of this $49.3 billion company trade at a staggering 50 times forward earnings expectations, so it isn't exactly a safe bet right now.

Guardant Health's a long way from safe, but it's still small enough to provide market-thumping gains over the next few years if it can gain a significant share of a growing market for liquid biopsies. Betting against Illumina would be a terrible idea, but right now Guardant Health looks like the better stock to buy.