Bull markets come and go, and give way to bear markets, and come back again. The stock market has a remarkable habit of steadily rising with the passage of time. For investors who stay invested through market highs and lows, and consistently put cash to work in wonderful businesses, it's possible to compound returns over time into a profitable, extensive portfolio.
If you're on the hunt for companies to buy for less than $1,000 right now, here are two stocks to consider for your buy basket.
1. DexCom
DexCom(NASDAQ: DXCM) hasn't performed in line with the broader market's successes this year, but the company is in great shape. One of the reasons the stock has likely been hit down a bit more recently, along with other diabetes care companies, is concerns among some investors about the impact of treatments growing in popularity, such as glucagon-like peptide 1 (GLP-1) agonist medications.
However, some of these fluctuations may come down to a fundamental misunderstanding about diabetes treatment options. While it's true that both type 1 and type 2 diabetics have seen success in managing blood sugar levels using GLP-1 medications, continuous glucose monitoring (CGM) devices made by companies like DexCom perform a complementary, essential purpose. A CGM helps to ensure that a patient is receiving granular and real-time insights about the state of their blood sugar levels so they can make healthcare and nutrition decisions accordingly.
One element of a diabetes care plan does not replace the other, and there are wide-ranging use cases for CGMs not only for patients with type 1 and type 2 diabetes but also for those who have prediabetes. DexCom controls approximately 40% of the CGM market. Its flagship CGM device was launched in its latest generation, the G7, in 2022.
The G7 CGM is the company's fastest and smallest sensor, with a warmup time of just 30 minutes. It is also the most widely covered CGM on the market thanks to DexCom's long-standing partnerships with healthcare payers. The G7 connects directly to the Apple watch for users in the U.S., Ireland, and the U.K., with integrations in other countries expected soon.
DexCom also recently garnered the distinction of achieving regulatory approval for the first glucose biosensor in the U.S. that doesn't need a prescription. Its Stelo CGM is approved specifically for patients with type 2 diabetes who are not on insulin therapy. This is DexCom's first product for diabetics who aren't using insulin, and it represents a notable penetration into a broad segment of its total addressable market.
It's estimated that the Stelo CGM could benefit up to 25 million lives in the U.S. alone, and being able to access it over the counter is another barrier to entry for patients that has been been removed. Bear in mind that around 70% of type 2 diabetics do not require insulin therapy.
DexCom is a profitable business and revenue is growing steadily from its portfolio of market-leading products. The company brought in revenue of $921 million in the first quarter of 2024, up 24% on a year-over-year basis, while net income jumped 200% year-over-year to $146 million. For investors who want to add a resilient healthcare growth stock to their portfolios, DexCom looks like a great business to take a long, hard second look at.
2. Gartner
Gartner (NYSE: IT) is known for its research and consulting services, and the company works with businesses across 90 countries and territories around the globe. The company's Magic Quadrant report has become an industry standard for businesses in the tech space to look at competitors in a particular market and strategize their own growth approach.
Gartner makes money in several different ways. Its research segment is its largest source of revenue growth and is subscription-based. Most contracts are at least 12 months long, and roughly 70% are multiyear, giving the company predictable sources of recurring revenue. This segment delivers the research content and data-driven analysis that organizations of all sizes around the world use to align their business vision and streamline operations.
Gartner's second stream of revenue is from the conferences that it holds for information technology and business executives. Finally, Gartner makes money from consulting services provided to chief information officers and other senior executives at various companies.
Revenue from Gartner's research division is recognized over the term of the specific contract. Revenue from its conference division is recognized once the meeting or conference is completed. Consulting revenues often derive from fixed fees or are delivered as those specific services are provided.
To give readers an idea of the breakdown of Gartner's revenue sources as they translate to its overall balance sheet, in the full year 2023, the company reported just shy of $6 billion in total revenue. That was a nice 8% bump compared to the full year 2022. Of that total revenue amount, about $4.9 billion was derived from its subscription-based research segment, while conference revenue totaled $505.2 million and consulting revenue $514.7 million.
Gartner is a profitable company. Last year, the company brought in a total net income of about $883 million, up 9% from the prior 12-month period. Fast-forward to the first quarter of 2024, and the company brought in profits of $211 million on revenue of about $1.5 billion. That revenue figure was up about 5% one year ago, even though net income was down year over year.
The company is also consistently cash-flow positive. Gartner brought in an operating cash flow of $189 million in Q1 and a free cash flow of $166 million. Those two figures were up 15% and 16% from one year ago. Gartner's leadership in the technological research and consulting space has given it a considerable footprint in a vast total addressable market that management estimates is in the region of $200 billion. Shares are up about 30% from one year ago, and some investors might want to take a second look before they possibly edge higher.
Should you invest $1,000 in DexCom right now?
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Rachel Warren has positions in Apple and DexCom. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends DexCom and Gartner. The Motley Fool has a disclosure policy.
