The healthcare sector can be a great place to look for growth stocks. Buoyed by both the forward march of technological progress and people's simple desire to stay healthy and feel good, some healthcare companies are heavy on innovation and relatively light on competition.
And that's why they can grow into their markets for years and years without fail, multiplying in value over time. Let's take a look at three steadily growing businesses in healthcare that have a solid chance of doubling in the near future.
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1. Fulgent Genetics
With its shares up by more than 975% since March 2019, Fulgent Genetics (FLGT 0.39%) has already made quite a few of its investors rich, and there's plenty more growth on the way.
As its name implies, it offers a huge swath of genetic testing options with a special focus on cancer screening and diagnostics and reproductive health. Over the last three years, its quarterly revenue grew by an eye-popping 4,590%, reaching $251.7 million in the fourth quarter of 2021.
The majority of that wild run-up stems from its sale of coronavirus diagnostic tests, which have been in demand over the last couple of years. And while revenue from those tests is expected to grow by 92% year over year in the first quarter of this year, potentially topping $480 million, Fulgent doesn't consider it to be a core element of the company's future.
Instead, to keep growing, the company is focusing on penetrating the Chinese market, where it has competed via a joint venture with a local business since 2021. By shoring up its position in China, Fulgent is planning to outgrow the sharp drop-off in coronavirus diagnostic revenue that is likely to occur if the pandemic ebbs sometime soon. And even without its coronavirus test income, management is predicting that its core revenue should grow by 28% year over year for 2022.
At that rate, it won't take too long for the stock to double again -- just be sure to time your purchase carefully as its shares will probably take a hit as coronavirus test sales fall.
2. Abiomed
Abiomed (ABMD) makes heart pumps that surgeons use to keep patients alive during and after they have cardiac surgery. Though demand for such devices isn't exactly going through the roof, that hasn't stopped Abiomed's sales from rising steadily over time. In the last 10 years, its quarterly revenue expanded by 599%, and its free cash flow (FCF) grew by an admirable 1,520%. And there's no sign of this streak stopping anytime soon.
Its Impella CP and Impella 2.5 heart pumps are distributed to 1,567 hospitals in the U.S. out of an estimated 1,788 eligible sites. Likewise, Abiomed's growth outside of the U.S. is occurring at a rapid clip with sales in the Japanese market growing 27% year over year as of the third quarter of 2021.
In fact, this year is expected to be such a sizzler that the company had to update a new and (slightly) higher earnings guidance with its third-quarter report. For 2022, management estimates revenue could grow by as much as 22%, hitting at least $1 billion.
Finally, Abiomed has a handful of ongoing clinical trials that are investigating whether its heart pumps can be used in additional contexts. By doing this, it can keep penetrating the global surgical cardiac support market and thereby continue to deliver for its shareholders for quite some time.
3. DexCom
People with diabetes need to test their blood glucose levels a few times per day to ensure their symptoms remain under control. Traditionally, this involves a pin-prick blood test and a glucose monitor, but DexCom (DXCM 1.89%) has a better solution.
DexCom's continuous glucose monitors (CGMs) are wearable devices that free patients from needing to perform routine pin-pricks by testing their blood glucose levels at frequent and regular intervals. And over the last five years, its annual revenue from sales of those CGMs increased by 241%, totaling $2.4 billion in 2021.
Aside from selling CGM units, the company also makes a software package that customers can use to track their blood glucose levels over time. With the help of the software, patients can sync their insulin pumps to their CGM, thereby automating much of their care maintenance. Plus, DexCom is consistently developing newer CGMs with better capabilities.
This year, DexCom is anticipating up to $2.9 billion in sales, which would work out to be growth of as much as 20%. Given that the number of people with diabetes is rising globally and patients are looking for better solutions than pin-prick tests, management predicts that the company's total number of eligible patients around the world will more than triple by the end of 2023.
And that's a surefire sign that DexCom will have plenty of room to keep on growing like it has been for the foreseeable future.
