All three of the major U.S. stock market indices are down by double digits from the all-time highs they set in February. That marketwide weakness has knocked down the share price of almost every stock, but a few dozen companies have managed to sidestep the sell-off and are currently trading at all-time highs.
Abbott Laboratories (ABT -0.39%), Dexcom (DXCM -0.37%), and MarketAxess Holdings (MKTX -0.18%) have never been more highly valued than they are today. Here's why investors can't get enough of these stocks.
Abbott Laboratories is a broadly diversified healthcare company that has been in the news a lot recently. It recently launched three diagnostic tests for COVID-19, including a molecular test that can tell whether you have COVID-19 in five minutes. The company is ramping up production of these tests, and CVS Health announced that it's using drive-up stations in its parking lots as part of the innovative system.
Abbott's rapid innovation in response to COVID-19 is wonderful -- but it's only a tiny part of its overall business. The company is a big player in numerous healthcare markets, including pharmaceuticals, diagnostics, nutritional offerings, and products to help with cardiovascular issues.
Abbott's recently announced first-quarter results looked good. Revenue jumped 2.5% to $7.7 billion, and adjusted net income rose 3% to $0.65 per share. The nutrition division was the star of the show, posting growth of 7.3%, likely in response to people stocking up in response to shelter-in-place orders. While these figures were below Abbott's original forecast, they exceeded Wall Street's estimates on both fronts.
Management decided to withdraw its original guidance for the full year, which makes sense, but the company's broadly diversified portfolio should help it easily handle the crisis. The company should also be able to continue its 47-year streak of boosting its dividend payment, which will be music to dividend-focused investors' ears.
Diabetes is a massive health problem. More than 34 million Americans have diabetes, and another 88 million Americans are at risk of developing it. The numbers only skyrocket from there when you zoom out to include the rest of the world.
Treating diabetes requires blood glucose monitoring, which has historically required a blood sample obtained from a finger prick. More than a decade ago, Dexcom launched a wearable sensor that continuously monitors glucose levels, which is helpful because readings can fluctuate wildly throughout the day.
Dexcom's system has been a massive success. Revenue has grown by more than 3,680% over the last decade to reach $1.47 billion last year. This amazing growth propelled Dexcom's stock to new heights all along the way, which made the company one of the best-performing healthcare stocks you could have owned over the past decade.
Dexcom expects to grow its top line by at least 17% in 2020, and it has a new sensor in development that should prove popular with the diabetes community. Wall Street clearly believes in this company's potential, which is why shares are (once again) trading at a fresh all-time high.
The odds are good that you've never heard of MarketAxess. The company specializes in electronic fixed-income trading at the institutional level, so it's not one most consumers come into contact with.
Believe it or not, electronic fixed-income trading -- buying and selling fixed-income securities such as Treasuries or bonds over the Internet -- has still not been widely adopted. On an average day, more than $67 billion worth of fixed-income securities trade hands. Last year, electronic fixed-income platforms only processed about $8 billion worth of trades per day. The remainder take place via one-on-one phone calls or by email, both of which are slow, illiquid, and inefficient. With a penetration rate of less than 12%, there's lots of market share left for MarketAxess to grab.
MarketAxess is already producing jaw-dropping financial results at its current market share; it cranked out a stunning 47% operating margin in the fourth quarter of 2019. The company's balance sheet is in tip-top shape, too, boasting $500 million in cash and investments and no long-term debt. MarketAxess is so obscenely profitable that it can easily afford to make the occasional acquisition, buy back stock, and pay a growing dividend all at the same time.
Trading activity tends to pick up when markets go haywire, so it wasn't surprising to see that MarketAxess reported a 50% year-over-year increase in credit trading volume in March. That sets the stage for this company to have a very prosperous 2020. Combine the current environment with the company's long-term potential, and it's no surprise to see traders bidding up shares of this amazing growth stock to new heights.