One of the hottest places to invest in right now is healthcare. While there is hope that the COVID-19 pandemic could come to an end in 2021 with the Food and Drug Administration (FDA) approving multiple vaccines and more potentially on the way, the need for testing isn't going to go away. No one wants to see COVID-19 cases start spiking again, and for the economy to reopen back to how it was before the pandemic, there will continue to be a big need for testing.

That's why diagnostics and testing company Quidel (QDEL) looks to be the best growth stock to buy this year. With a market cap of less than $9 billion, this is still a fairly small company when you're talking healthcare. Even vaccine maker Moderna is already near a $50 billion valuation, and it may be running out of room to rise in value. Quidel's relatively small size combined with its growth potential makes it a hot buy right now because it could easily double in value.

Person administering COVID-19 test in a drive-thru.

Image source: Getty Images.

Quidel's sales skyrocketed 276% in Q3

On Oct. 29, 2020, Quidel reported its latest earnings results for the period ending Sept. 30, 2020. What stood out was its top line, which at $476.1 million nearly quadrupled its prior-year tally of just $126.5 million. Of its total sales, COVID-19 related products generated $375.7 million, which is just under 80% of its total revenue. That's nearly as much as Quidel generated in sales across all segments during the first nine months of 2019 -- $382.7 million. In 2020, the company's rapid immunoassay segment alone (which includes its rapid COVID-19 tests) reported $513.6 million in sales over the same period, making up the bulk of its top line, which totaled $852.5 million.

The company's products were some of the first to be approved by the FDA for COVID-19 testing. The agency granted emergency use authorization (EUA) for Quidel's Lyra SARS-CoV-2 assay rapid test on March 17, 2020 -- just days after the World Health Organization officially declared COVID-19 a pandemic. Quidel has continued to come out with more tests since then, including the Sofia 2 SARS Antigen FIA, which can produce results in just 15 minutes. The FDA granted that test EUA on May 8, 2020.

And there's even more growth ahead

On Jan. 7, Quidel released preliminary numbers for the fourth quarter that continue to show incredible growth. The company is projecting that sales for the period will come in between $808 million and $810 million -- a 70% improvement from Q3. And what's amazing is that it still might not be the peak for the company. Currently, Quidel says that it is making 13 million of its Sofia and QuickVue tests per month but by the end of 2021 that number will climb to more than 70 million.

Quidel isn't the only testing company out there, as Abbott Laboratories and Thermo Fisher Scientific are some of the bigger names that also sell products that test for COVID-19. But with nearly 100 million cases of the coronavirus around the world and that number continuing to climb, there's plenty of demand out there for testing. With Quidel producing tens of millions of tests and that number scaling up in the months ahead, the company is in a terrific position to help not just the healthcare industry but economies around the world to get back to normal. Many people who have COVID-19 are asymptomatic, which means that frequent testing is necessary to ensure that businesses are able to safely open back up and resume their normal operations.

Quidel's stock is also incredibly cheap

Given its sales numbers and the growth that it's generating, Quidel's stock gives you a lot of bang for your buck. Looking ahead, shares of Quidel are trading at just 2.8 times the company's future sales (based on analysts' estimates). That's cheap when you compare it against the other healthcare stocks that were mentioned earlier, which are trading at much higher price-to-sales multiples:

QDEL PS Ratio (Forward) Chart

QDEL PS Ratio (Forward) data by YCharts

Is Quidel a good long-term buy?

This year will no doubt be another great one for Quidel. In 2020, its shares rose 139% while the S&P 500 was up 16%. It wouldn't be surprising for the stock to do even better this year given how rapidly its sales have been growing. The bigger question is whether it'll continue to be a buy after 2021, and that's clear as mud right about now. 

Quidel isn't a stock you can just buy and forget about because a lot will depend on the future of COVID-19 and how long people will need to be tested for it, as well as how the company's business will adapt once the pandemic is really over and testing isn't needed (assuming that point is ever reached). There are simply too many unanswered questions when it comes to hanging on to it for the long haul, but at the very least, it looks to be a scorching-hot buy in 2021.