Two Outstanding Growth Stocks Experiencing Declines of 45% and 32%, Providing Potential Purchase Opportunities
Exploring undervalued stocks in the market, we have two fantastic growth stocks that are currently trading at a discount. Let's dive into these promising investments.
1. DexCom
DexCom (DXCM -0.84%) has established a significant presence in the continuous glucose monitoring (CGM) industry with its range of devices, helping individuals manage their blood sugar levels. Despite a recent 45% drop from the start of 2024, this stock offers plenty to consider before making decisions about your portfolio.
The main factor influencing DexCom's stock performance is the rising popularity of glucagon-like peptide-1 (GLP-1) agonist drugs for chronic weight management and diabetes management. While these drugs can be incredibly effective, they do not replace the need for a CGM. Instead, the two might work together to improve patient outcomes. In this sense, the potential impact of GLP-1 drugs on the CGM market seems somewhat exaggerated.
There are other factors contributing to DexCom's recent stock volatility as well. These include:
- A slight adjustment to the company's annual guidance in its recent earnings report
- Faster-than-expected rebate implementation for its flagship G7 CGM, which resulted in a short-term impact on revenue
However, DexCom continues to innovate and grow its offering. In Q2 2024, the company reported:
- 15% year-over-year revenue growth to $1 billion
- A notable 24% increase in net income to $143.5 million
DexCom recently launched Stelo, the first-ever over-the-counter glucose biosensor approved in the U.S. This expansion opens up a market of 125 million potential customers for the company, including those with type 2 diabetes and those still prediabetic. The Stelo biosensor is available as a monthly subscription or a pay-as-you-go option, presenting further growth opportunities.
Although DexCom's growth story may appear stagnant to some investors, its solid financial footing and diverse range of CGM devices targeting every diabetes patient segment suggest that there is still room for growth.
2. Bill Holdings
Bill Holdings (BILL 1.58%) excels in providing financial automation software solutions for small-to-midsize businesses. The stock's recent downturn may be due to a mix of factors, including ongoing volatility in growth-oriented businesses and their efforts to achieve consistent profitability.
Bill Holdings' software enables businesses to streamline essential operations, from payment automation to expense management. The company generates revenue from subscription fees and transaction fees, with a strong emphasis on providing extensive value to customers.
Bill Holdings reported solid Q1 2024 financial results, including:
- A 22% year-over-year revenue increase to $1.3 billion
- A core revenue jump of 19% to $1.1 billion
- Improved gross profit of $1.1 billion for the year
The company is still not profitable under generally accepted accounting principles (GAAP), but management expects its total addressable market to surpass 70 million small businesses and sole proprietors globally. As virtual payment management software becomes increasingly vital for companies, Bill Holdings seems well-positioned to capitalize on this trend, making this an attractive option for investors looking for a discounted growth stock.
- The potential for increased adoption of financial management software in small-to-medium businesses could significantly boost Bill Holdings' revenue streams, providing an excellent opportunity for those interested in investing in the finance sector.
- As Bill Holdings continues to innovate and expand its offerings, its focus on financial automation solutions could potentially attract more businesses looking to streamline their operations, which could positively impact the company's financial performance and stock value in the future.
