If you're looking for stocks that can provide life-changing returns, the healthcare sector has exactly what want. It might not happen this year or next, but each of these businesses has what it takes to do more than just keep pace with the broad market.
None of these companies are making a lot of money for their shareholders right now, but all three have a chance to grow to many times their current size. Read on to see how.
|Company (Symbol)||Industry||Market Cap|
|Amyris (AMRS -1.11%)||Synthetic biology||$4.4 billion|
|Nano-X Imaging (NNOX -0.47%)||Medical imaging||$1.4 billion|
|Renalytix (RNLX 5.03%)||Medical diagnostics||$1.2 billion|
Laboratory-to-market synthetic biology, or synbio, platforms are a dime a dozen these days, but Amyris stands head and shoulders above the rest. Luckily for bargain shoppers, visible bumps and bruises collected while building out its uniquely profitable platform are still keeping the stock price somewhat depressed.
In a nutshell, synbio companies use fermentation vats full of proprietary microorganisms to produce high-value ingredients for third-party manufacturers at a super-low cost. In March, Amyris announced success at producing a large quantity of cannabigerol (CBG), which is a naturally occurring cannabinoid many times more potent than cannabidiol (CBD).
Amyris already learned the hard way that relying on third parties to purchase all its synbio products leads to excess capacity and dismal profit margins. Amyris launched the Biossance brand in 2017 to take advantage of excess squalane production capacity, and it's working out better than anyone imagined. Revenue from Amyris' consumer segment overtook its ingredient segment in the first quarter by growing 73% year over year to $15.7 million.
With dozens of different lab-to-market ingredients rolling through its development pipeline, Amyris is positioned to deliver explosive growth for the foreseeable future.
If there's a corner of the healthcare sector ripe for disruption, it's the market for X-ray-based imaging. Healthcare providers will spend around $21 billion this year on X-ray-based imaging systems and they're aching for an upgrade that Nano-X Imaging intends to deliver.
Computers have gotten a lot better at processing images, but devices that produce those images still rely on century-old technology. Traditional X-ray sources generate a stream of electrons by heating a filament to blinding temperatures with high voltage. Just imagine an ultra-high-powered version of the old-fashioned light bulbs that everyday consumers replaced with LEDs years ago.
Today's computer-aided tomography or CAT scanners need to rotate a single source of X-rays around patients. Since that X-ray source needs to reach at least 2,000 degrees Celsius before it starts emitting electrons, there are a lot of limitations. In June, Nano-X submitted an application to the FDA for its multi-source Nanox.ARC imaging system that will make legacy imaging systems look ridiculous if granted clearance.
The FDA granted clearance to a single-source X-ray system called Nanox Cart in April, but it's the multi-source version that matters most. Nano-X expects to ship just 15,000 units of its single-source X-Ray imaging system by the end of 2024.
If Nano-X Imaging can get the FDA to clear its multi-source system, it could replace legacy systems used by around one-third of the world's population. The other two-thirds of the world's population doesn't even have access to legacy X-ray imaging services. This gives Nano-X Imaging's low-cost solution an enormous runway to take flight.
Chronic kidney disease (CKD) is probably a much bigger problem than you ever imagined. At the moment it affects an estimated 37 million Americans, or around one in seven adults. Since CKD risk rises with age, the size of the problem is growing right along with the average age of populations in developed nations.
Renalytix is a diagnostics company that employs a proprietary algorithm to sort CKD patients into high-risk groups that need lots of help immediately and low-risk groups that could soak up limited resources without gaining a benefit. A growing body of evidence says using KidneyIntelX to select CKD patients most likely to progress to a condition requiring regular dialysis treatments is significantly more accurate than using standard methods.
Under the recently enacted Medicare Coverage of Innovative Technology (MCIT) rule, all devices designated as breakthroughs by the FDA, KidneyIntelX included, receive national coverage determinations the moment they receive clearance. An application seeking clearance of KidneyIntelX is currently in front of the FDA, and a green light could quickly lead to billions in annual revenues.