Most investors know that diversifying a portfolio is critical to long-term success.
It’s simply not safe to put all your proverbial eggs on one basket. Ditto for individual companies; the wider the product base, the more stable and reliable that organization’s revenue becomes. General Electric (GE), as an example, operates several distinct divisions, while Procter & Gamble (PG) has a presence in almost every aisle at the grocery store.
Sometimes, though, when a particular idea is an obvious slam-dunk winner, putting all of a company’s resources into that one product or service can yield the best return for shareholders. Here’s a look at four niche healthcare stocks that ended up doling out huge gains for shareholders this year by doing just that.
The glucose monitoring market is worth $10 billion per year, and wireless communication technologies can do pretty much anything these days. But for some reason, the diabetes-management industry has been oddly slow to introduce a remote glucose monitoring device that’s easy to use, works wirelessly and makes a meaningful difference in the way diabetes patients manage their illness. DexCom (DXCM) appears to be the company leading the long-awaited change on that front.
DexCom shares are up 125% this year, largely on the heels of the launch of the G4 Platinum glucose monitoring device. It was approved in June of last year, and become available for purchase about three months later. So far, DXCM has increased sales by about 50% thanks to the launch of the G4 Platinum device. With 26 million diabetics in the United States alone, however, DexCom has only begun to scratch the surface.
While there was a time when most biopharma companies handled all aspects of their drug development activities “in house”, that approach is becoming the exception to the norm. Now, many drugmakers — large and small — outsource their R&D work to labs that not only specialize in drug discovery and development, but to labs that have their finger on the pulse of what works and what doesn’t work with the FDA. Enter Parexel International Corporation (PRXL). Its stock is up 85% so far this year, as the value of offering third-party drug development became en vogue.
PRXL has been of particular interest of late, as it has designed and begun to offer a proprietary trial-management technology. That, coupled with a large double-digit increase in biotech funding for the year so far, point to more than a fair share of the clinical research industry’s business coming Parexel International’s direction.
When consumers hear the term “invisible braces”, most all of them immediately think of the Invisalign — the brand that’s taken over the orthodontics industry, partly by smart marketing, and partly just because it’s a brilliant idea. Since 1999, more than 2 million people have straightened their teeth thanks to the Invisalign system.
So what, pray tell, just recently lit a fire under shares of parent company Align Technology (ALGN)? The stock’s up a whopping 107% year-to-date … much of which was spurred by Q3’s earnings report a couple pf weeks ago. Between a new lower-cost braces product called Realine and a revamp of its sales and marketing plan, Align Technology is starting to move forward in a big way again. Last quarter’s earnings were up 62%, and the ALGN bottom line should grow at around the same pace for the fourth quarter.
BioTelemetry (BEAT) — the company formerly known as CardioNet — has watched its shares soar more than 300% for the year so far. The prod for the rally was (mostly) June’s announcement that the company’s cardiac monitoring equipment would be covered by health insurer UnitedHealth Group (UNH) for a period of three years. It’s a big deal, because UnitedHealth Group insures 70 million U.S. residents.
Yes, other companies besides BioTelemetry make heart-monitoring hardware. Now-subsidiary CardioNet, however, is the world’s leading supplier of mobile cardiac outpatient telemetry equipment, and it has become clear in recent months that the organization intends to leverage that position. Shareholders of BEAT are equally excited about leveraging that name with a new revenue-bearing device in the future. Through a partnership forged with IMEC and Holst Centre in early 2013, BioTelemetry/CardioNet will unveil a pair of next-generation cardiac products probably sometime in mid-2014.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.