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Market Crash 2.0: Where to Invest $1,000

By Prosper Junior Bakiny – Oct 12, 2020 at 8:14AM

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A market downturn can't stop these two top healthcare stocks.

Investors have experienced years' worth of volatility in the past nine months. First, we witnessed the fastest descent into bear-market territory in history as the coronavirus pandemic took hold in March. Then, the market vaulted higher, even reaching brand-new highs in August. But in September, stocks slowed down some, and the S&P 500 dropped by about 4.6%.

Volatility is, of course, part of the investment cycle, and so are bear markets. That means another market crash will happen; it's just a matter of when. Maybe a second (or third) wave of COVID-19 will be the catalyst; maybe it will be something else entirely. No matter when or why it happens, here are two stocks that will survive the next market crash and continue climbing long after: Guardant Health (GH 8.37%) and Abbott Laboratories (ABT 3.01%)

Let's look closer into why putting $1,000 of your hard-earned cash into either (or both) healthcare stocks would be a great move. 

GH Chart

GH data by YCharts

Guardant Health: The future of cancer diagnostics 

Guardant Health develops liquid biopsies -- tests that allow physicians to look for cancer cells from tumors in blood samples. Why is this method a big deal? One of the main alternative techniques, tissue biopsy, requires direct physical access to the tumor inside a patient's body. This competing procedure is riskier, more time-consuming (resulting in a delay in treatment), and more expensive. Liquid biopsies can help detect cancer sooner, improve health outcomes, and reduce costs.

Guardant Health generates the bulk of its revenue from Guardant360 and GuardantOMNI, two liquid biopsy products it offers to oncologists and other professionals. The company continues to expand its sales of these products. During the second quarter that ended June 30, its total revenue increased by 23% to $66.3 million. Guardant Health's precision oncology testing revenue (which records sales of Guardant360 and GuardantOMNI) was $51 million, 21% higher than the year-ago period.

Three sets of hands holding a cancer ribbon.

Image source: Getty Images.

Guardant Health is merely scratching the surface of the liquid biopsy market, which is worth more than $50 billion. The company is also working on development of liquid biopsy procedures it calls Lunar-1 and Lunar-2. The former could match early-stage cancer patients with neoadjuvant and adjuvant therapies. Neoadjuvant therapies are administered before the main treatment, and adjuvant therapies are offered after the main treatment to target remaining cancer cells. Lunar-2, meanwhile, could help detect cancer earlier, thereby increasing a patient's chance of survival. If approved, these products will become important growth drivers for the company.

Guardant Health is currently unprofitable. The red ink on its bottom line may count against the company in a market crash, as investors look to put their money into more stable businesses. But in my view, its long-term prospects justify overlooking the net losses. In the long run, I believe Guardant Health is poised to reward its shareholders. 

Abbott Laboratories: a leader in medical devices

Abbott Laboratories is a medical device specialist with a long track record of success. First founded in 1888, the company has consistently outperformed the market. For instance, in the past five years, shares of Abbott Laboratories climbed by 167.3% -- compared with a 72.7% jump for the S&P 500. However, even with a market cap of $192.3 billion, the future is bright for the healthcare giant. Here's why. 

Abbott Laboratories has been able to recoup some of the financial losses caused by the pandemic by developing and selling COVID-19 tests. During its second quarter ending on June 30, the company's diagnostics segments reported sales of about $2 billion, a 7.1% year-over-year organic increase. This segment was one of the best-performing for Abbott during the second quarter. The company attributed this performance to its coronavirus tests.

Overall, Abbott Laboratories has shipped more than 12 million of its ID NOW COVID-19 tests, which can detect the disease in as little as five minutes. Note that COVID-19 continues to spread, with the U.S. recording thousands of new cases every week. Abbott Laboratories' work in this area will continue to be in high demand. 

Doctor holding a sign that says "diabetes."

Image source: Getty Images.

Abbott has several other promising businesses. The company's Freestyle Libre franchise continues to perform well. The Freestyle Libre is a continuous glucose monitor (CGM) that which allows diabetes patients to keep ongoing track of their blood glucose levels. During the second quarter, sales of the Freestyle Libre soared by about 40% year over year on an organic basis. 

However, there's still room for growth. The U.S. Food and Drug Administration recently cleared the Freestyle Libre 2, an upgrade over its predecessor in terms of accuracy. And the market for glucose monitoring devices should grow at a good clip in the years to come. According to Grand View Research, this market will be worth $17.8 billion by 2026, up from $11.6 billion this year.

Expect Abbott Laboratories to remain a strong player in this space. And with other growth drivers available to the company, it will continue outperforming the market, even if there is another downturn on the horizon. Adding shares of this healthcare stock to your portfolio today would be a great move. 

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Guardant Health. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Abbott Laboratories Stock Quote
Abbott Laboratories
$102.52 (3.01%) $3.00
Guardant Health, Inc. Stock Quote
Guardant Health, Inc.
$59.42 (8.37%) $4.59

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