Many stocks are still shifting between sharp highs and lows these days, but wonderful businesses continue to impress investors even in the current environment. Looking beyond share price, you don't have to search hard to find compelling businesses with abundant growth opportunities that boast strong financials to boot.
Here are two such stocks to consider adding to your portfolio right now.
1. DexCom
DexCom (DXCM 2.89%) is one of the world's leading developers and manufacturers of continuous glucose monitoring (CGM) devices, which help people monitor and manage their blood sugar levels. While primarily used by the type 1 diabetes population, and increasingly, those with type 2 diabetes, there could be use cases for these products in individuals with prediabetes as well.
All of these markets are still underpenetrated, though. Let's look at the U.S. market, for example, where the population has one of the highest rates of diabetes in the world and where DexCom generates the majority of its revenue. Roughly 34 million people -- about 11% of the U.S. population -- have diabetes. Approximately 7 million of them have diabetes but have not received a formal diagnosis. As of 2021, it was estimated that only 2.4 million diabetics in the U.S. were using a CGM. And only about 3% to 4% of individuals with type 2 diabetes use a CGM.
The company is currently launching the latest generation of its CGM device, the G7, which is 60% smaller and has a quicker warm-up time than its predecessor (which management says is the fastest of any such product on the market). This follows a robust year of growth in 2022, in which DexCom's revenue rose by 19% to $2.9 billion. The company reported 16% growth in U.S. revenue, while international revenue jumped 28%. And it generated net income of $341 million for the year, up 57% compared to 2021.
Considering that roughly 422 million people have diabetes worldwide, DexCom's market leadership (estimated to be around 50% globally) bodes well for its continued growth in its vast and steadily widening total addressable market. Investors who buy in on the dip now could be primed for enviable returns in the years to come.
2. Intuitive Surgical
Intuitive Surgical (ISRG -0.55%) is coming off of several quarters of fluctuating procedure volumes as COVID-19 surges in the U.S. and Europe earlier in 2022, and later spikes in cases in Asia all put the brakes on some elective surgeries. While these kinds of events could persist for the next few quarters, these aren't long-term trends, and they aren't related to deficiencies in Intuitive Surgical's actual business.
As such, this could be an intriguing opportunity to buy the stock, which is still sitting on a five-year return of about 100%. In that period, the company has grown its top line by about 70%, while net income has risen by approximately 20%. And the company has grown its cash from operations by a total of 80% over that period.
Intuitive Surgical remains a leader in the rapidly growing multibillion-dollar surgical robotics market. Its portfolio consists of its flagship da Vinci surgical suite and its Ion system. The former can be used in a wide range of minimally invasive surgeries, while the Ion is specifically for minimally invasive lung biopsies.
These devices, plus the instruments, accessories, replacement parts, software solutions, and other services for them that the company sells, brought in $6.2 billion in revenue in 2022, and net income of $1.3 billion. Meanwhile, the company closed the year holding $6.7 billion in cash and investments. Intuitive Surgical remains well-positioned to capitalize on the continued growth of its industry as the adoption of surgical robotics systems widens, and as it finds ways to further diversify its revenue streams.
