If you like to stuff stockings with gifts that grow wealth, then look no further. These fast-growing businesses are rapidly carving out different corners of America's gigantic healthcare sector, and hardly anyone's paying attention yet.
|Company (Symbol)||Market Cap||Healthcare Niche||IPO Date|
|Nevro ( NVRO -0.49% )||$3.5 billion||Neurostimulation||Nov. 12, 2014|
|InMode ( INMD 3.94% )||$1.7 billion||Aesthetics||Aug. 12, 2019|
|ShockWave Medical ( SWAV 2.35% )||$1.1 billion||Lithotripsy||March 11, 2019|
If you've never heard of these companies, don't beat yourself up. Nevro shares didn't begin trading until 2014 and it's the oldest stock on this list by more than four years.
All three of these healthcare stocks have been soaring, but they're still flying below most investors' radar. Here's why you want to snap them up in December before they climb much further.
1. Nevro: The next wave
Neurostimulators have been used to mask chronic pain signals for years, but they aren't nearly as popular as they could be due to limitations and side effects. Nevro's proprietary Senza systems send pulses to the spine at higher frequencies that are less likely to cause unwanted jolts and shocks in response to unusual movements. Unlike competing stimulators, Senza systems can be worn while sleeping and driving.
Nevro's more practical stimulators are hammering the competition and could continue doing so for years to come. The company has successfully defended its patented high-frequency system against competitors large and small, which means Nevro's devices are the only option for patients who don't want to experience a persistent buzzing sensation whenever their device is on.
In the third quarter, the number of trial procedures and permanent implants rose 18% over the previous-year period, and the fourth quarter will probably be even better. In November, the company launched Senza Omnia, a high-frequency stimulator that also delivers lower frequencies in physician-programmable patterns.
2. InMode: Cosmetic surgery made easy
Shares of this Israeli medical device manufacturer have risen 273% since they began trading on a U.S. stock exchange in August, and there's probably a lot of fuel in the tank to push it much higher. Cosmetic surgeons and their patients are enamored with InMode's proprietary handheld devices that use radio waves and light pulses to perform an array of aesthetic procedures without putting patients under the knife.
InMode's devices allow cosmetic surgery centers to contour just about any part of the face and body without surgery, and they also handle vascular issues and hair removal. In the third quarter of 2019, total revenue rose 57% year over year as the company expanded its U.S. presence.
A closer look at InMode's latest income statement suggests demand for its noninvasive body sculpting tools is already strong. Third-quarter operating expenses rose just 42% year over year, allowing the company to report a $16 million operating profit that was 90% higher than the previous-year period.
3. ShockWave Medical: Intravascular lithotripsy
The vast majority of people over 70 years of age have calcium deposits in their coronary arteries that significantly increase their risk of a heart attack. The deposits can also make it impossible to slide a stent into the artery to keep it open.
Artery calcification doesn't go away on its own, and there aren't available treatment options that patients can take to reverse the process. Luckily, arterial calcium deposits are susceptible to the same shock waves used to clear kidney stones.
ShockWave Medical has shrunk kidney stone pulverizers down to the size of a catheter that can slide through arteries and emit shock waves right next to calcium deposits. The stock has soared since its initial public offering in March, thanks to accelerating sales of its intravascular lithotripsy devices.
Third-quarter product revenue bounded 215% higher compared to the previous-year period, and like InMode, ShockWave isn't hurling money at its sales and marketing department to drive demand. Total operating expenses over the same time frame rose just 78%, and that's while supporting the company's U.S. expansion.
Unlike InMode, ShockWave isn't exactly profitable yet, but it is the only company selling intravascular lithotripsy devices. The rapid growth ShockWave has already experienced could be just the tip of a very big iceberg.
In the numbers
While InMode and Nevro are modestly priced for companies on the verge of a huge sales explosion, ShockWave Medical shares are trading at 26.5 times trailing revenue. While that looks like a nosebleed-inducing multiple, it's important to remember the company expects total 2019 sales to climb at least 234% year over year to $41 million. Since ShockWave has the burgeoning market for intravascular calcification removal completely sewn up, sales could continue accelerating for years.