The healthcare industry may not be the most exciting place to invest at first glance. However, it's often these very companies that have businesses primed to weather market and economic storms because of the non-cyclicality of their products and services.
If you're looking for two superior healthcare stocks to put cash into this month, here are two no-brainer buys to consider building positions in or adding to right now.
1. DexCom
DexCom (DXCM -0.24%) is in the process of launching its latest product in both domestic and international markets, the G7 continuous glucose monitoring device. This device is the most upgraded version of its flagship CGM product and has the fastest warm-up time of any such device that has been commercialized to date.
In December, the G7 was given the green light by the Food and Drug Administration for all diabetics aged two and up. DexCom's CGM is the most covered and reimbursed CGM currently on the market, and is now covered for reimbursement by over 97% of private insurers nationwide.
For all of 2022, DexCom delivered top-line growth of 19%, while its bottom line grew nearly 60% compared to 2021. In total, the healthcare company reported revenue of $3 billion and earnings of $341 million for the 12-month period. It also closed out the year with cash and investments on its balance sheet in the amount of about $2.5 billion.
Expanding coverage options and the rising prevalence of diabetes worldwide create a massive and growing addressable market opportunity that DexCom is well-positioned to continue deriving strong results from in the years ahead. Bear in mind this is a company that has increased its annual revenue by 140% over the trailing five years alone.
Meanwhile, its stock has delivered a total return of more than 700%. For reference, that is nearly 10 times the return the S&P 500 has delivered in that same period.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 1.25%) is another stock that has rewarded investors with generous returns over the years. Over the trailing five-year period, the stock has delivered a total return in the amount of 94%. The S&P 500's trailing five-year return currently sits right around 74%.
The company also has a respectable track record of growing revenue and profits. 2022 was a continuation of that trend. Vertex's four approved products (all of which treat cystic fibrosis) brought in a combined revenue of $9 billion, representing a hike of 18% from full-year 2021. Trikafta continues to be the top performer for the company. The drug, which is approved to treat more than 90% of all individuals with cystic fibrosis in the U.S. alone, raked in total product revenue of $7.7 billion for the 12-month period. Vertex Pharmaceuticals also raked in profits of $3.3 billion for the 12-month stretch.
Meanwhile, management estimates that there are still as many as 20,000 cystic fibrosis patients who could benefit from its products but are not yet taking them. COO Stuart Arbuckle noted in the 2022 earnings call that "the growth in the CF population can be attributed to more patients coming forward to receive treatment, better data capture in patient registries, and perhaps most importantly, people with CF are living longer due to improvements in patient care and the availability of truly effective therapies."
Considering that Vertex Pharmaceuticals is the only company with approved CFTR modulators on the market -- these are drugs that work to correct the underlying cause of cystic fibrosis -- the company is both a direct instigator and a direct beneficiary of these tailwinds. That fact, along with Vertex's robust pipeline, which includes a new rare blood disorder therapy that could be on the cusp of approval, bodes particularly well for the company's growth over the next five to 10 years and well beyond.
