What happened
Shares of DexCom (DXCM +0.88%) were jumping 5.7% higher as of 3:02 p.m. EDT on Wednesday. The maker of continuous glucose monitoring (CGM) systems didn't announce any news. Instead, DexCom's gains appear to be the result of investors' general optimism about the economy as the overall stock market rose on Wednesday.
So what
Most stocks tend to move higher when the major market indexes rise. The strongest stocks, though, usually generate gains that are well above the indexes'. And DexCom qualifies as one of the strongest on the market, with the healthcare stock more than doubling so far in 2020.
Image source: Getty Images.
The most important thing for investors to understand is why DexCom has performed so well. That question can be answered with one letter and one numeral: G6.
Sales continue to soar for DexCom's G6 CGM system. The company reported a 34% year-over-year revenue jump in the second quarter. DexCom's growth could pick up even more in the second half of the year with fewer headwinds from the COVID-19 pandemic.
Now what
Competition in the CGM market has intensified with Abbott Labs winning FDA clearance for its Freestyle Libre 2 CGM in June. However, DexCom appears to be in a good position to continue delivering strong growth with its G6 system and should experience a sales boost when it launches its new G7 system in the future.
