If you invested $ 5,000 in Dexcom during the coronavirus market crash, that’s how much money you would have now

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The March stock market crash and the volatility that followed exposed stocks that are recession-proof champions, while pulling the curtain down on companies much more vulnerable to economic adversity. Among the healthcare companies that have continued to deliver profitable returns, Dexcom (NASDAQ: DXCM) is a priority. The company is known for manufacturing and marketing continuous glucose monitoring (CGM) devices.

Dexcom has consistently outperformed the S&P 500this year’s performance, with substantial and relatively consistent gains over a roller coaster year. As of September 16, Dexcom had gained 82% year-to-date compared to the S&P 500’s return of around 5.5%.

If you’re curious about what a $ 5,000 investment in Dexcom in March would be worth today, you’ve come to the right place. Let’s take a closer look at how Dexcom has performed over the past six months.

Image source: Getty Images.

$ 5,000 would be worth …

Dexcom shares dipped only moderately during the March stock market crash. The stock closed at $ 219.38 on January 2, the first trading day of the year. Stocks hit their lowest point on March 17, when Dexcom closed at $ 191.16, down about 13% from early 2020. Stock started to rally at the end of the month of March and has increased with momentum since.

Suppose you invested in Dexcom on March 17th, when the stock hit its low. With $ 5,000 to spend, you could have bought about 26 shares of the company. Today, that investment would be worth more than $ 10,200. Few stocks give you the opportunity to more than double your money in just six months.

The explanation for Dexcom’s resilience to extreme market headwinds is not that complicated. The company is a leading manufacturer of CGM devices, which are in high demand despite adverse market conditions and serve a large population of healthcare consumers. It is estimated that approximately 34.2 million people, or about 11% of the entire American population, have diabetes. The CGM market is expected to achieve a compound annual growth rate (CAGR) of more than 12% between 2020 and 2026. Diabetic patients are also among the most at risk of suffering from severe complications from COVID-19, which has no only increases demand for Dexcom. products since the start of the pandemic.

DXCM data by YCharts

A key market leader in continuous glucose monitoring devices

Dexcom’s flagship product is its G6 system, a one-touch applicator that generates real-time blood sugar levels. The company recently completed the launch of its G6 Pro system, marketed as “the first and only professional single-use CGM available in blind and non-blind mode.” In blind mode, patients will not have access to their glucose readings, alarms or other health alerts from the G6 app. This setting allows healthcare providers to capture patient health information while they behave normally, without the influence of a CGM. Unmasked mode allows patients full access to their glucose levels and other tracked information on the Dexcom G6 app.

Dexcom increased its first quarter revenue by 44% and recent second quarter revenue by 34% year over year. In the second quarter, which ended June 30, Dexcom reported 38% domestic revenue growth and 21% revenue growth in markets outside of the United States. also reported generally accepted accounting principles (GAAP) gross profit margins of over 63% in Q1 and 62.9% in Q2.

Management expects the company to increase its annual revenue by 25% from 2019, achieving total revenue of $ 1.9 billion and gross profit margin of 65% or more for the full year. As of June 30, Dexcom reported cash and marketable securities equivalent to $ 2.5 billion, which positively exceeds its total liabilities of $ 2.2 billion. Currently, the company does not pay a dividend, which frees up a considerable portion of its cash reserves to work on paying down existing debt.

Do you have to take the plunge?

Analysts are optimistic about Dexcom’s growth trajectory over the next few years. They predict the company will grow its profits by more than 55% per year through 2025. In fact, Dexcom was popular with investors for its consistent profit growth before the pandemic, and continued its streak into the worst recession. economic since the Great Depression. .

The company has consistently grown double-digit annual profits over the past five years alone: ​​2015 (55%), 2016 (43%), 2017 (25%), 2018 (44%) and 2019 (43%). Dexcom’s exceptional track record and excellent cash-to-debt ratio have also enabled the company to experience success, and its addressable diabetes management market in the United States and internationally is poised to continue to grow. . For all of these reasons, I think investors should now grab growth stocks, before they climb even more.



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