There are many ways one can become richer, from trying to buy a winning lottery ticket to pouncing on some get-rich-quick scheme. Unfortunately, none of these methods is very reliable at all, unlike investing in equities.
The stock market is for those who are willing to wait, and it won't increase one's wealth substantially overnight. However, with a disciplined approach, the right stocks, and enough patience, investing in publicly traded companies is an excellent way to become richer over the long run.
With that in mind, let's consider two stocks in the healthcare field that look ideally positioned to deliver outsized returns: Vertex Pharmaceuticals (VRTX -0.06%) and DexCom (DXCM -9.90%).
1. Vertex Pharmaceuticals
It's difficult to find something to dislike about Vertex Pharmaceuticals, a leading biotechnology company. While drugmakers usually have to contend with stiff competition in their areas of specialization, Vertex is the only game in town in its core therapeutic field, cystic fibrosis (CF). It's the only company to market medicines that treat the underlying causes of CF.
Another risk that biotechs often have to deal with is the threat of losing patent exclusivity for their products. That will happen to Vertex Pharmaceuticals eventually, but not anytime soon. The company's most important medicine, Trikafta -- which can treat up to 90% of CF patients -- won't run into patent cliffs until 2037.
But is Vertex Pharmaceuticals a one-trick pony? What happens if a competitor manages to develop alternative CF therapies, as hard as that has been so far? Don't worry -- Vertex is close to earning new non-CF approvals. Its next launch should be exa-cel, a gene-editing therapy for sickle cell disease and transfusion-dependent beta-thalassemia (two rare blood diseases) it developed with CRISPR Therapeutics.
That's just 1 of 5 potential launches it's anticipating in the next half-decade. Here, Vertex runs into the risk of clinical or regulatory setbacks. But casting a wide net helps mitigate that risk. If just 3 of the 5 drugs it expects to launch in the next five years make it to the market, Vertex should improve its financial results meaningfully. After all, the company's earnings have been growing at an impressive clip for a decade, thanks to its CF portfolio.
VRTX Revenue (Quarterly) data by YCharts.
Vertex Pharmaceuticals also has other products in the earlier stages of development. The company has all the tools of a top-performing biotech stock. In the next 10 years, it should continue delivering outsized returns, just as it has in the past.
2. DexCom
Diabetes has been on the rise for decades, a trend that is expected to continue in the future. So there's a large and growing need for better ways to manage this chronic health illness. One option with increasing adoption is continuous glucose monitoring (CGM), or devices that help diabetes patients stay on top of their blood glucose levels throughout the day.
DexCom is one of the leading CGM companies. Its flagship G6 device has helped it increase revenue and earnings.
DXCM Revenue (Quarterly) data by YCharts.
There's more where that came from. DexCom started launching its newest device, the G7, last year. The company's next-gen device performed even better than the G6 in helping diabetes patients achieve better health outcomes in clinical trials. DexCom is also moving into new territories. It recently entered South America through the Argentinian market for the first time.
The medical device specialist still has massive room to grow, even with competition from Abbott Laboratories' FreeStyle Libre franchise. DexCom could also benefit if third-party payers increasingly agree to cover CGM devices as clinical evidence of their effectiveness grows. Earlier this year, the U.S. Centers for Medicare and Medicaid Services expanded the population of diabetes patients reimbursed for CGM under Medicare.
But the market remains underpenetrated in the U.S., compared to those people who are now covered. There also remains plenty of opportunity abroad. The diabetes population worldwide is increasing. This dynamic coupled with DexCom's ability to innovate and its already solid position in this market spell good news for the company and its shareholders.
