2 Must-Have Healthcare Stocks to Buy Right Now for Under $200

With $200, you can buy a lot of lottery tickets, one of which could be a winner. However, the odds of winning money playing the lottery are slim. Investing in the stock market may not make you rich overnight like the lottery would, but even with $200, investors can buy shares of companies that are well positioned to deliver exceptional returns over the long term. Consider two stocks trading well below $200 that have what it takes to do so: Novo Nordisk (NYSE: NVO) And DexCom (NASDAQ: DXCM).

1. Novo Nordisk

Pharmaceutical companies thrive on innovation. Few have done better than Novo Nordisk in recent years. The drugmaker deserves credit for pioneering GLP-1 weight-loss drugs. Novo Nordisk’s portfolio of approved products, which includes weight-loss drug Wegovy and diabetes treatment Ozempic, helps it post strong financial results, resulting in above-average returns.

NVO data by YCharts.

Investors are also excited about the company’s pipeline. While Novo Nordisk’s success has attracted plenty of potential competitors (it seems like every drugmaker is trying to get into the weight-loss space these days), the Danish pharmaceutical giant still has a few of the most promising candidates in development. The most interesting may be CagriSema, a compound combining semaglutide (the active ingredient in Wegovy and Ozempic) with cagrilintide, another GLP-1 drug. CagriSema appeared to be more effective than its individual components in a phase 2 study.

CagriSema is currently in Phase 3 studies. Research firm Evaluate Pharma estimates that the therapy could generate up to $20.2 billion in annual revenue by 2030. Does that sound too optimistic? Given the pace at which Ozempic and Wegovy are growing, the increasing popularity of this class of drugs, and the fact that CagriSema may be even more effective, such projections are not surprising. Thus, there are many indications that Novo Nordisk remains a dominant force in its key areas of diabetes and obesity, which should help it maintain its momentum.

Additionally, the company is developing drugs in several other areas that could help it complement and diversify its portfolio—over 90% of its revenue now comes from diabetes or obesity products. This concentration hasn’t been a problem for Novo Nordisk yet, but it could become one if the number of approved GLP-1 products expands significantly. The company is preparing for this eventuality, however, and investors needn’t worry. Novo Nordisk remains a top stock to own for the long term, and its shares are trading at around $137 as of this writing.

2. DexCom

DexCom shares fell about 40% in July after reporting second-quarter results. Some might see this as a bad sign, an understandable reaction. But it’s important to dig deeper. Let’s look at three reasons why the medical device company remains a top stock. First, DexCom has historically been volatile. Shares have fallen sharply on several occasions. However, the company has typically delivered market-beating returns to loyal, long-term shareholders. So this is hardly out of the ordinary (historically) for DexCom.

DXCM Total Return Level data by YCharts.

Second, DexCom’s recent slide is largely due to issues that won’t affect it in the long term. For example, when the company rolled out its latest continuous glucose monitoring (CGM) system in the U.S., the G7, patients received discounts at a higher rate than DexCom had anticipated. The company’s third-quarter outlook was a bit weak, not what investors expect from high-valuation growth stocks: DexCom’s forward price-to-earnings (P/E) ratio of 33 is still high even after the crash.

The average forward P/E for the healthcare sector is 19.2. A correction could have been long overdue, but the company should eventually bounce back if its financial results are strong.

This brings us to the third point: DexCom’s vast global opportunity. DexCom is one of the leaders in CGM technology with Abbott LaboratoriesThe latter reports around 6 million users worldwide.

Even assuming DexCom has the same installed base (it’s likely smaller), its 12 million devices don’t even represent 10% of the world’s half-billion adults with diabetes. DexCom will need to develop new CGM options and enter new territories to expand its addressable market. That’s exactly what it’s always done. After its recent drop, DexCom shares are trading at about $69. So $200 buys two, with plenty of change to spare.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has a position in and recommends Abbott Laboratories. The Motley Fool recommends DexCom and Novo Nordisk. The Motley Fool has a disclosure policy.