How can you tell which stocks are poised to provide huge gains? There are lots of correct answers to this question. The most successful investors, though, have something in common: They look for businesses with large available markets and strong advantages over their competition.
All three stocks on this list tick the right boxes. Read on to see what they could do for your portfolio.
Hims & Hers Health
In the U.S., the most effective products for treating hair loss, acne, and anxiety generally aren’t available without a prescription. Visiting a licensed professional to obtain one that can be filled by a separate pharmacy is a consumer-unfriendly process that Hims & Hers Health (NYSE:HIMS) has improved a great deal.
By offering a differentiated service that integrates online physician visits with pharmaceutical delivery services, Hims & Hers Health is becoming a leader in this lucrative telehealth niche. In the second quarter, the company reported top-line revenue that soared 69% year over year to an annualized $243 million.
In the U.S., spending on prescription drugs and primary care amounts to around $880 billion annually. That leaves plenty of room for this company to continue growing at a blazing pace.
Thanks to the Affordable Care Act, U.S. hospitals can earn more by safely discharging patients earlier than usual. That makes venous clot-busting equipment from Inari Medical (NASDAQ:NARI) very attractive.
Clot-preventing blood thinners that are easier to administer than warfarin, like Eliquis from Bristol-Myers Squibb, generate billions in annual sales. Inari Medical’s catheter-based clot removal system offers a more direct approach that diminishes patients’ need for drugs like Eliquis.
Exploding demand pushed second-quarter revenue up 150% year over year. The addressable market is worth billions, so Inari’s annualized revenue of $254 million is only a small amount of it. The company has only scratched the surface.
Around $2 billion is spent annually treating pulmonary embolisms (PE) that could be addressed with Inari’s FlowTriever device. Only around 10% of addressable PE cases are treated with mechanical intervention at the moment. A growing body of clinical data that shows that Inari Medical’s devices produce improved outcomes should drive rapid growth for the foreseeable future.
Blood-clot removal isn’t the only way healthcare systems are trying to boost efficiency. Keeping bad kidneys from worsening is a lucrative niche that Renalytix (NASDAQ:RNLX) already has sewn up.
There are an estimated 37 million Americans living with chronic kidney disease, but not all of them need serious intervention now to avoid a case of kidney failure. Renalytix employs a pattern-recognizing algorithm that helps doctors make important decisions that could slow down the progression of this disease. It also lets physicians know which patients need less intervention so they can conserve limited resources.
Renalytix recently published a budget analysis that compared overall expenses for chronic kidney-disease patients monitored by their doctors to patients monitored by its KidneyIntelX diagnostic service. The analysis projected a five-year savings of over $1 billion for every 100,000 diabetes patients monitored with KidneyIntelX.
When it comes to diseases that progress slowly, it takes a lot of time to produce evidence of a benefit. Without any serious competitors on the horizon, Renalytix could grow into this lucrative niche all by itself for years to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.