Editor’s note: This column is part of our Best Stocks for 2021 contest. Matt McCall’s pick for the contest is OncoCyte (NASDAQ:OCX).
I firmly believe that at the end of our Roaring 2020s, healthcare will be so advanced that we look back at the modern miracles of today as crude. And genomics is the key to this future of healthcare.
Genomics gives us the ability to map human genomes and create genetic tests, allowing healthcare professionals to detect diseases earlier than ever before and then create precision treatments. This ultimately increases recovery rates.
We saw how mapping COVID-19’s genome enabled scientists to quickly develop remarkably effective vaccines that enable the reopening of the global economy — what I call the Great Grand Reopening.
But that’s just the beginning.
In December, I introduced you to OncoCyte (NASDAQ:OCX) as my pick for InvestorPlace’s Best Stocks for 2021 contest. It’s a small company playing a big role in healthcare’s march into the future.
OncoCyte is a molecular diagnostics company offering genetic testing to physicians and patients, who then receive clinically actionable information back. The goal is to improve patient outcomes and decrease overall costs by helping doctors and patients make better and more informed decisions.
In the past, molecular diagnostics has accounted for just 3% of all U.S. healthcare spending. But get this… it has helped make about 70% of all healthcare decisions. That simply doesn’t add up. And when you have this kind of discrepancy, you also have a massive opportunity.
I’m not the only one who thinks so.
Not only has insider buying activity picked up at the company recently — to the tune of more than $5 million in the first quarter — CEO Andrew Asbury also boosted his stake in the business by over $52,000 in mid-March.
Plus, Piper Sandler analyst Steven Mah called OncoCyte a “top small-cap pick with multiple upcoming catalysts,” citing increased confidence in its global expansion and goal to become a one stop shop for oncology testing.
I believe the early detection of cancer will be one of the biggest trends in the coming decade — and OncoCyte is a clear leader in the space. It has a strong product pipeline, with its Determa platform currently offering two unique tests to help manage a patient’s journey from diagnosis to treatment to monitoring.
The first is DetermaRx, the first and only genetic test that can identify non-small cell lung cancer (NSCLC) patients with a high risk of recurrence after surgery. The second test, DetermaIO, can predict immunotherapy responses across multiple drug classes. Both of these markets represent unmet needs.
OncoCyte released its fourth-quarter 2020 results in mid-March, missing the mark on revenue because of the impact of COVID-19’s resurgence. The top line fell 9.4% quarter-over-quarter while earnings increased slightly, from a loss of 13 cents per share to a loss of 11 cents.
Still, the long-term future remains very bullish here, with revenue expected to grow 51% annually and earnings estimated to climb 21%.
Longtime subscribers of mine know that the key to long-term success when investing in early stage, small-cap companies is that they show a clear path to profitability, and OncoCyte certainly does that. It’s forecast to turn its first annual profit in the next three years.
Adding to my bullish outlook is the recently announced partnership with MultiPlan. As part of that deal, DetermaRx will become available to MultiPlan’s network at a predetermined price per test. This makes OncoCyte’s treatments significantly more accessible and is a strong catalyst for future success.
2020 was a building year for OncoCyte, and 2021 is already shaping up to be a year for growth. The stock has gotten off to a fast start — up more than 90% year-to-date as I write this on March 30 — and the best is yet to come.
As long as OncoCyte remains a leader in cancer testing — a huge growth trend for the Roaring 2020s — I am confident we will continue to see its share price soar.
On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in the article.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now.
