One way to make a lot of money is to follow the money -- then invest in where that money is going. In other words, see which sectors of the economy are growing. Check out the companies in that sector that have tremendous growth potential, especially those with stocks that are already soaring. Buy those stocks, hold them over the long run, and let your gains accumulate.
I'd argue that the healthcare sector is a great area in which to focus your attention. Healthcare already accounts for nearly 18% of the U.S. gross domestic product. It's booming as a result of aging demographic trends. But which stocks in the healthcare sector have really great growth potential? Here are three healthcare stocks that could very well make you rich.
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1. Guardant Health
I sing the praises of Guardant Health (GH 9.46%) quite often. And for good reason. The company is an innovative leader in a hot area of healthcare. Its shares have soared more than 160% since its initial public offering in late 2018.
Guardant Health's stock performance hasn't kept up with its revenue growth, though. Sales for the company's Guardant360 and GuardantOMNI products continue to skyrocket. I'm not surprised in the least. Guardant360 has become a top option for healthcare providers to match up advanced-stage cancer patients with the best therapy. Meanwhile, GuardantOMNI is used by a growing number of drugmakers to screen patients for their clinical studies evaluating experimental cancer drugs.
Both of these products are liquid biopsies -- tests that detect DNA fragments in the blood that have broken off from tumor cells. As exciting as Guardant360 and GuardantOMNI are, though, they don't hold a candle to the two Lunar liquid biopsies that Guardant Health is currently testing in clinical trials.
Lunar-1 holds the potential to help healthcare professionals make critical decisions about adjuvant treatment for cancer patients as well as monitor for the recurrence of cancer in patients. Lunar-2's goal is even more ambitious: detecting cancer at very early stages.
If both Lunar products are successful in clinical testing, Guardant Health's total market opportunity (including the potential for its current two liquid biopsies) could top $50 billion in the U.S. alone. With the company's market cap now at a little over $8 billion, this stock could be a massive winner.
2. Livongo Health
Livongo Health (LVGO) ranks as another of my favorite healthcare stocks. So far this year, Livongo's shares have jumped more than 400%. The COVID-19 pandemic served as a huge catalyst for the stock because it stoked interest in the company's intriguing digital health-management platform.
Managing chronic conditions such as diabetes and hypertension is usually complicated. Livongo makes it easy, though, through its applied health signals. The company's technology analyzes data to deliver these signals, which provide real-time, personalized, and easy-to-understand nudges for individuals with chronic conditions. If they take action based on these nudges, they'll be able to better manage their chronic conditions -- and lower costs, too.
Organizations that pay the healthcare costs of individuals with chronic conditions really appreciate the value that Livongo offers. The company now has over 1,250 clients, including more than 30% of the Fortune 500.
But all that Livongo has accomplished so far is only the tip of the iceberg. The company has captured less than 1% of the $28 billion-plus potential diabetes market in the U.S. It also has enormous opportunities in hypertension and behavioral health. My view is that Livongo Health is still in the early stages of its growth and could make investors a lot of money over the next decade and beyond.
3. Semmler Scientific
I haven't followed Semmler Scientific (SMLR 2.06%) as closely as I have Guardant Health or Livongo. However, the small healthcare technology company is intriguing. And its stock has skyrocketed more than 1,500% over the last three years.
Semmler focuses on a major healthcare issue that primarily impacts adults aged 50 and over -- vascular disease. The company's QuantaFlo test enables a medical assistant to make a preliminary diagnosis in around five minutes. QuantaFlo has been cleared by the FDA. Clinical trials have shown that it's accurate.
What's the big deal? Around three-quarters of Americans with vascular disease aren't diagnosed. That's a significant problem, considering that people with vascular disease have greater chances of having serious health complications or even death.
Semmler's revenue jumped more than 50% year over year in 2019. Its sales have been negatively impacted this year by the COVID-19 pandemic, but that should only be a temporary issue. The company is already profitable, with sustained earnings growth.
Like Livongo, Semmler offers a platform that helps lower healthcare costs over the long run. Its market cap currently stands around $350 million. I think Semmler could easily be a multibillion-dollar company by the end of the decade. An innovative product combined with a big potential market make this stock one that has a good chance of making early investors wealthy over time.
