10 Best Growth Stocks To Buy Now According To Billionaire Ray Dalio

5. DexCom, Inc. (NASDAQ:DXCM)

Latest Fiscal Year Annual Growth Rate: 24.49%

Bridgewater Associates’ Q1 2024 Investment: $51 million

DexCom, Inc. (NASDAQ:DXCM) is a medical devices company that makes software to allow diabetes patients to monitor their glucose levels. The firm enjoys a dominant position in its market due to its technological advantages which allow diabetes patients to monitor their glucose levels around the clock. This provides superior monitor capabilities over the traditional finger prick tests, and DexCom, Inc. (NASDAQ:DXCM) has also developed a global operations base that allows it to target several countries with its products. However, its very strength of having a robust product can prove to be a headwind in the off case that a strong competitor emerges or the diabetes market undergoes a paradigm shift. This is because DexCom, Inc. (NASDAQ:DXCM) does not target any other markets, in a classical case of the proverbial all eggs being placed in one basket.

This was also evident in 2023, which was the year of weight loss drugs on Wall Street. The shares tanked by 45% between July and October, as investors were worried that weight loss drugs could upend the diabetes market. However, as Artisan Partners notes in its Q4 2023 investor letter, these fears were short lived. Here’s what it had to say about DexCom, Inc. (NASDAQ:DXCM):

DexCom is the leader in continuous glucose-monitoring systems (CGM). We believe it is well positioned to continue penetrating the Type 1 diabetes market and to drive adoption in the much larger Type 2 diabetes market, with data increasingly supporting the clinical and economic case for using CGM sensors. By most indicators, DexCom is poised for a period of significant top- and bottom-line growth. Having made substantial investments in global distribution, product development and branding, the company has a receptive base of patients, physicians and payors ready for its newly launched next-generation G7 sensor. Shares experienced weakness earlier in the year due to market concerns that the rapid growth of GLP-1 diabetes/obesity drugs will reduce demand for diabetes management technologies. However, our view is that while the magnitude of the GLP-1 adoption will likely have both good and bad impacts on how CGMs are used, these changes will be slow to play out. Given this view, and an opportunistic valuation, we added to our position in Q4. Our patience was rewarded as shares rallied after the company reported strong financial results and management provided evidence of the synergies between CGMs and GLP-1 drugs in the fight against the obesity epidemic.