According to the U.S. Centers for Disease Control and Prevention (CDC), cancer is the second-leading cause of death in the U.S. (behind heart disease), claiming 599,601 lives in 2019. On the bright side, there has been notable progress in the multi-pronged approach to fight this disease. One area where scientists are making substantial headway is in the field of cancer diagnostics. 

This market was valued at $144.4 billion in 2018 and will keep expanding at a compound annual growth rate (CAGR) of 7% through 2026, according to the research firm Grand View Research. Purchasing shares of leading companies within this field could yield juicy returns down the road. Two cancer diagnostics-focused stocks worth buying are Exact Sciences (EXAS) and Guardant Health (GH -1.82%). Here is why an investment of $5,000 in either (or both) of these companies would be a great move. 

GH Chart

GH data by YCharts

1. Exact Sciences

Some cancer diagnoses can have better outcomes than others, especially if the disease is caught early. Any technology that allows us to do just that is likely to find some success. Helping decrease healthcare costs while saving lives isn't a bad business model. That's what Exact Sciences is doing with Cologuard, a noninvasive test for colorectal cancer, the second deadliest cancer in the U.S. When it's diagnosed in stages 1 or 2, the five-year survival rate for this disease is 90%, however, when diagnosed in stage 4, the five-year survival rate drops to 10%.

Cologuard addresses this need, and with 227,000 tests ordered since it was launched in 2014, it has helped Exact Sciences' excellent top-line growth in recent years. In the fourth quarter of its fiscal year 2020, which ended on Dec. 31, the company recorded $466.3 million in revenue, a 57.8% year over year increase. Exact Sciences' screening revenue grew by 9% year over year to $250 million, which it said was driven by Cologuard's volume growth. Note that the company did record $99 million in COVID testing revenue in the fourth quarter, a segment in which it did not record any sales in 2019.

But Exact Sciences' revenue growth predates the pandemic: The company's quarterly revenue soared by 416.5% year over year in the past three years.

What's next for Exact Sciences? First, it's still tapping into Cologuard's addressable market. According to the company, some 46 million Americans eligible for colorectal cancer screening have yet to undergo it. As more patients decide to get tested with its product, Exact Sciences' revenue will continue growing.

Exact Sciences is also working on a clinical trial for its multicancer liquid biopsy test. The company's shares soared by about 26% on Sept. 24 after it presented preliminary data from the trial. Liquid biopsies are noninvasive tests that allow physicians to look for cancer cells from tumors in blood samples. Exact Sciences' test demonstrated 86% sensitivity (the proportion of people with the disease who return a positive test) and 95% specificity (the proportion of people without the disease who have a negative test) during the trial.

The types of cancers this test can help detect include lung, liver, and stomach, among others. This multicancer test could help the company unlock a multibillion-dollar opportunity. Thanks to these prospects, patient investors can cash in on tremendous returns with this healthcare stock in the next five years and beyond.

Black doctor wearing white physician's coat and glasses sits across a desk from a mature white male and female.

Image source: Getty Images

2. Guardant Health

Guardant Health's best-known products, Guardant360 and GuardantOMNI, are liquid biopsy tests with many essential uses. Guardant360 helps healthcare professionals match cancer patients with the best treatment options. Meanwhile, GuardantOMNI helps pharmaceutical companies identify patients with the right profile for their clinical studies.

The benefits of these products include faster diagnostics, lower healthcare costs, and better health outcomes. Guardant Health's liquid biopsy tests have found success on the market. In the past three years, the company's quarterly revenue has grown at a terrific rate.GH Revenue (Quarterly) Chart

GH Revenue (Quarterly) data by YCharts

Guardant Health's top-line growth in recent years is largely due to the success of Guardant360 and GuardantOMNI. What's more, the company has both short-term and long-term catalysts investors can look forward to. First, sales of the Guardant360 should continue trending upward this year.

Guardant Health recently reported data from a study showing that this product did better than tissue biopsy in genomic profiling of advanced non-small cell lung cancer. Tissue biopsies are invasive surgical procedures performed to detect cancer.

Lung cancer is the leading cause of cancer death in the U.S., and non-small cell lung cancer is the most common type of lung cancer. These results will help the Guardant360 make even more headway within its addressable market.

Moreover, the company is currently developing two products, Lunar-1 and Lunar-2. The former is for the detection of residual and recurrent cancer. Lunar-2 will focus on the early detection of cancer. Guardant Health sees a $45 billion opportunity for both of these products if the current studies validate their efficacy.

The data will take some time to come in, but patient investors would do well to monitor the progress of these programs. Thanks to these catalysts, Guardant Health looks like an excellent stock to buy and hold through 2021 and beyond.