Certain stocks have an X factor. When they arrive on the scene, investors flock to them. Why? It's usually because there's a perception that the companies are on to something big. Investors scoop up shares because of a fear of missing out.

Guardant Health (GH -2.25%) definitely has such an X factor. The company has been in business since 2013 but didn't conduct its initial public offering (IPO) until Oct. 4, 2018. Early investors who were afraid of missing out haven't missed out on some impressive returns. Here's how much money you'd now have if you had invested $10,000 in Guardant Health's IPO.

Smiling young man with clenched fists and  $100 bills falling down around him

Image source: Getty Images.

A fantastic performance even with the recent decline

Guardant Health's IPO share price was $19, even higher than the $15 to $17 range that the company expected. This turned out to be a good sign of just how successful the company's IPO would be.

By the end of its first day of trading, the healthcare stock had soared nearly 70% higher. Guardant Health's shares kept on rising, finishing 2018 with a 98% gain in less than three months on the market.

During 2019, Guardant Health's share price more than doubled. The stock closed at an all-time high on Feb. 21, 2020. At that point, an initial investment of $10,000 in Guardant Health's IPO would have been worth $46,714.

Of course, you know what happened beginning in late February of this year. The stock market plunged as the novel coronavirus and the disease that it causes, COVID-19, spread across the world. Guardant Health's shares sank as much as 34% off the highs from earlier in the year before rebounding.

So how much would that $10,000 investment in the company's IPO be worth now? Nearly $36,250. The initial investment has delivered a return of over 360% in less than 20 months. That's still a fantastic performance even with the recent coronavirus-fueled decline.

How Guardant Health did it

Guardant Health delivered these tremendous gains the old-fashioned way. The company topped Wall Street's estimates quarter in and quarter out.

The key to this success was the skyrocketing demand for Guardant Health's two liquid biopsy products, Guardant360 and GuardantOMNI. Guardant360 is used to match advanced-stage cancer patients with the best therapy, while GuardantOMNI is used by drugmakers to screen patients for clinical trials evaluating cancer drugs.

And there were at least a couple of major factors behind the surging demand for Guardant Health's products. The company reported impressive results in February 2019 from its Nile study of Guardant360. This study pitted Guardant Health's liquid biopsy against standard-of-care tissue testing in detecting key biomarkers in patients with advanced non-small-cell lung cancer (NSCLC). Guardant360 came out on top.

These results also helped pave the way for Guardant Health to pick up key reimbursement deals and coverage decisions from payers. One of the most important of these was the decision by Palmetto GBA to make Guardant360 the first (and, so far, only) liquid biopsy to receive broad coverage for use in most types of advanced solid tumors.

Bigger and better things ahead

Is it too late to make a lot of money by investing in Guardant Health? I don't think so. 

Guardant Health thinks that its Guardant360 liquid biopsy has a $6 billion addressable annual market in the U.S. alone. By comparison, the company's total revenue last year was $214.4 million. 

An even greater opportunity for Guardant Health, though, lies with its LUNAR liquid biopsies, which are currently available for research use only. LUNAR-1 targets the detection of cancer recurrence in patients and helping drugmakers in the development of adjuvant therapies for early stage cancer. LUNAR-2 could enable the detection of cancer at early stages. The potential U.S. market for LUNAR-1 is around $15 billion. LUNAR-2 has a much larger addressable market of more than $30 billion. 

If Guardant Health can capture a significant share of these markets, its long-term returns could make the 360% gain since its IPO look like chump change. I think that this stock has the kind of X factor that every investor should like.