Are you looking for a way to beat the market over the long run? You might want to seriously consider medical-device stocks.

Over the last five years, the medical-device sector has generated returns that more than doubled the S&P 500 index's performance. Overall, medical-device stocks are also beating the S&P 500 and healthcare stocks, in general, so far this year.

But which individual medical-device stocks rank among the best? Here are three top picks to buy for the second half of 2020.

Photos of medical devices in white circles

Image source: Getty Images.

1. Abbott Labs

Abbott Labs (NYSE:ABT) is second only to Johnson & Johnson on the list of the world's biggest medical-device stocks companies by market cap. It markets a wide range of medical devices, including coronary stents, diagnostics systems, and pacemakers. There are two product lines that I think will be especially important growth drivers for Abbott in the second half of this year.

The company recently won Food and Drug Administration (FDA) clearance for its Freestyle Libre 2 continuous glucose monitoring (CGM) system. It's the only integrated CGM system that transmits blood sugar data every minute and has real-time alarms for alerting when glucose levels are too high or too low. Freestyle Libre 2 is also less expensive than its rivals. I predict that the new product will be a huge success story for Abbott.

I also expect Abbott will continue to benefit from the rise in COVID-19 testing. The company markets several tests for detecting novel coronavirus infection and antibodies. Abbott's COVID-19 test for its ID NOW platform remains the fastest test available.

2. Intuitive Surgical

Intuitive Surgical (NASDAQ:ISRG) pioneered the field of robotically assisted surgery two decades ago with its da Vinci system. And the company still dominates the robotic surgical systems market today, with more than 5,500 da Vinci systems installed throughout the world.

The COVID-19 pandemic hurt Intuitive in the first quarter as hospitals delayed non-urgent procedures. But I expect that the pent-up demand for these surgeries will be a nice tailwind for the company in the second half of 2020. Many of the procedures for which da Vinci is used can be pushed back for a while, but not indefinitely.

Another reason why Intuitive Surgical is a top medical-device stock to buy is its cash stockpile. The company had $5.9 billion in cash, cash equivalents, and investments at the end of the first quarter. I suspect that Intuitive will put some of that money to good use in ways that benefit shareholders during the latter part of the year, potentially including share buybacks and acquisitions.

3. ShockWave Medical

ShockWave Medical (NASDAQ:SWAV) is another innovative medical-device pioneer. The company uses lithotripsy, which has been around for decades for breaking up kidney stones to clear clogged arteries.

Like Intuitive Surgical, ShockWave experienced a significant impact from the COVID-19 pandemic in Q1 as procedures were delayed. But I think the company will enjoy a resurgence in the back half of the year, as well. CEO Doug Godshall said in ShockWave's Q1 conference call that the normally slow summer months could be much busier than usual. I look for that momentum to continue into the fall.

ShockWave should have another catalyst on the way, too. The company expects to file for FDA clearance of its C2 coronary intravascular lithotripsy (IVL) catheter in the third quarter of 2020. That should set up a commercial launch in the U.S. in the first quarter of 2021.