Every portfolio could use a couple of evergreen stocks -- you know, the stocks issued by companies that can keep growing for years and years without making major changes to their business models or products. Commonly enough, evergreens have staying power because they're getting a steady boost from ultra long-term trends in the population or the economy, and that's part of the secret sauce that can make them killer investments.
With that in mind, let's analyze a pair of evergreen growth stocks that have already made quite a few investors richer by smashing the market's returns over the last 10 years. If you're willing to buy and hold either for the next few decades or longer, there's a very good chance that you'll be the proud owner of a lot more money than you invest in them today.
Medical device company DexCom's (DXCM 0.63%) makes wearable continuous glucose monitors (CGMs) that help people with diabetes get minute-by-minute data about their blood glucose levels, thereby giving them better control of their symptoms.
People with diabetes typically need to measure their blood glucose levels at least a few times per day to stay healthy, and they often do so with old techniques that require pricking their skin with a needle to draw a small amount of blood to analyze with a device.
It's a pretty simple choice: Get pinched one time to place one of its CGM sensors that'll last 10 days and provide many thousands of measurements, or poke a finger multiple times per day, every day, and get as many measurements as the patient can manage. DexCom's monitors are a lower-friction option for patients, which is one factor driving the company's rising market share compared to traditional methods over time.
Over the past five years, its quarterly revenue has popped by 277%, reaching above $696 million in the second quarter. And the number of people who'll need its devices is growing by the day. In 2021, there were an estimated 537 million people globally between the ages of 20 and 79 with diabetes, and by 2045, there is expected to be roughly 783 million people. In terms of DexCom's addressable market, management expects its accessible non-U.S. population of patients to triple between 2020 and the first half of 2023.
Best yet, the business doesn't need to change its plans very much to keep taking advantage of long-term trends and to keep penetrating its international markets. While there's always a risk that more powerful competitors like Abbott Laboratories will contest DexCom's market share, they aren't focused on just making CGMs, so the company will still likely maintain a competitive advantage in its niche for years to come, and that's yet another reason why it's a favorable investment.
2. STAAR Surgical
STAAR Surgical (STAA -0.65%) is also a medical device business, but instead of making a product that replaces older methods for measuring blood glucose levels, it makes implantable collamer lenses (ICLs) that are, roughly speaking, intended for correcting your vision much like glasses or contact lenses. The main difference is the fact that they're semi-permanently implanted into the patient's eyes, thereby cutting down on annoyances like cleaning unsightly droplets of splashed soup off of eyeglasses or blindly stumbling around trying to find a dropped contact lens.
STAAR's ICLs tap into the long-term trend of rising levels of nearsightedness, which is expected to affect up to half the global population by 2050. For reference, somewhere under 30% of people are nearsighted today, so there's a massive market for the company's products now and also in the future. And STAAR owns roughly 9% of the global market for ICLs, even if its share of the global vision correction market including contact lenses and eyeglasses is far smaller.
At the moment, STAAR's total addressable market is around 35 million people with nearsightedness, and an additional 55 million people with farsightedness, which its lenses can also address. Those markets were how it brought in more than $230 million in 2021, an increase of 261% compared to its annual revenue a decade ago. Assuming that everything continues along the same worldwide trends, it's hard to see how STAAR could be worth less in 2032 (and beyond) than it is today.