The market's recent recovery seems to have hit a bit of a pause. After bottoming out in late March, the S&P 500 rallied by more than 50% through the end of August, only to fall by 3.9% in September. For long-term investors, though, this need not be cause for alarm. The market will always experience ups and downs, but that shouldn't stop you from investing. 

For those looking for exciting stock picks in this volatile market, here are two with significant upside potential that are worth serious consideration: bluebird bio (BLUE -8.70%) and Exact Sciences (EXAS -1.58%). If you have $500 lying around that you aren't saving for a rainy day, here is why putting that money to work by investing in either (or both) of these companies could be a great move.

BLUE Chart

BLUE data by YCharts

Bluebird: A leader in gene editing

Bluebird is a biotech that focuses on gene editing, which allows scientists to replace defective genes responsible for certain conditions with healthier versions. This technology could lead to the development of groundbreaking treatments for illnesses with few therapy options. Bluebird is going after such challenging targets as sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), two rare and potentially deadly blood disorders. 

Treatment options for SCD include medicines and blood transfusions to manage the disease as well as stem cell transplants. Bluebird reported in July that in a phase 1/2 clinical trial, its potential treatment, LentiGlobin, induced a "near-complete elimination" of vaso-occlusive crises (VOC) in SCD patients. VOCs are common side effects of SCD characterized by acute pain. Note that LentiGlobin is already approved for the treatment of TDT in the European Union, where it is known as Zynteglo.

As a one-time gene therapy, Zynteglo can cure TDT patients once and for all, a significant improvement over the regular blood transfusions that are the only other treatment for this condition. Zynteglo's 1.58-million-euro price tag could help the company rack up solid revenue in the coming quarters.

Hand drawing upward pointing graph.

Image source: Getty Images.

Bluebird has partnered with pharma giant Bristol Myers Squibb to develop a cancer treatment called ide-cel, which they submitted to the U.S. Food and Drug Administration (FDA) for review in July. It could earn regulatory approval sometime next year.

If the company's efforts in the gene-editing sphere pan out, not to mention its partnership with Bristol Myers Squibb, the biotech stock could deliver market-beating returns in the long run. And given that its stock is down by 38.5% year to date, now may be an excellent time to initiate a position. 

Exact Sciences: An exciting cancer diagnostics play

Detecting cancer early is critical to administering effective treatments, and that's Exact Sciences' stock in trade. The company's most important product is Cologuard, a non-invasive test kit for colorectal cancer, which is the second-deadliest cancer in the U.S., with roughly 53,200 annual deaths. That number could be much lower; according to Exact Sciences, the five-year survival rate for this cancer stands at nine out of 10 patients when it is diagnosed in stage 1 or 2. That survival rate drops to just one patient out of 10 when it is diagnosed in stage 4.

Exact Sciences estimates that roughly 46 million of those who are eligible for colorectal cancer screening in the U.S. remain unscreened, and it plans on acquiring a 40% share of this market. And the COVID-19 pandemic doesn't seem to have derailed this goal. During Exact Sciences' second-quarter earnings conference call on July 30, CEO Kevin Conroy said:

The COVID-19 crisis has highlighted the need for more convenient and accurate cancer testing options. Experts estimate that over the next decade there will be an additional 10,000 deaths from colorectal and breast cancer due to screenings that have been canceled or delayed just to the end of June. This looming crisis will continue to grow, [and] Cologuard is an accurate at-home colon cancer screening test. We believe the COVID-19 crisis will accelerate the adoption of Cologuard by one to two years toward our 40% market share goal.

Exact Sciences does have other avenues for growth, too. The company is developing a liquid biopsy screening test which, if effective, will be able to detect liver, lung, ovarian, and pancreatic cancer, among others. Liquid biopsies allow physicians to look for cancer cells from tumors in samples of blood from patients.

Exact Sciences recently reported that its multicancer screening test demonstrated 86% sensitivity (true positive rate) and 95% specificity (true negative rate) in a clinical trial. The company still has to conduct additional tests and obtain clearance from regulatory authorities, and if it does, this product could become a major growth driver for the company. Investors who buy shares of Exact Sciences could be handsomely rewarded down the road. 

Something to keep in mind

In my view, both bluebird bio's and Exact Sciences' share prices could end up doubling -- or more -- within the next two years. However, both healthcare companies face risks, including increased competition and the possibility of their products coming up short in clinical trials. Moreover, both companies are unprofitable at the moment. While Bluebird and Exact Sciences present strong upside potential, both are a bit on the risky side, and it is essential to invest with that in mind.