Not all stocks have responded to the bull market in the some way. While many businesses have followed the broader trend of steadily rising, some stocks are trading down considerably and even coming close to historical lows.
When you're looking at stocks to buy, whether shares are discounted or soaring, it's important to understand why those trends are happening and what it means for your portfolio. On that note, if you're hunting for top stocks to buy right now, here are two names to consider for your buy list.
1. DexCom
DexCom (NASDAQ: DXCM) is a leader in diabetes care with its assortment of continuous glucose monitoring (CGM) devices used by patients around the world to track blood sugar levels. While the company is trading down by about 10% from the start of the year, the business is doing exceptionally well.
As always, you have to look beyond the stock price and see how the company is performing, what its financials look like, and if the value proposition is there for investors. In this case,DexCom is one of the dominant forces in the CGM field. It has yielded considerable growth in past quarters from the launch of the latest generation of its flagship CGM, known as the G7.
Not only is the G7 the most covered CGM on the market, but it also has the fastest warm-up time. Most patients pay $20 or less per month to use this device.
DexCom -also has other CGM devices. This includes its new Stelo device, which was just approved for patients with type 2 diabetes who are not on insulin therapy. The Stelo is also the very first glucose biosensor in the U.S. that has been cleared by the U.S. Food and Drug Administration for use without a prescription.
At its recent presentation at the American Diabetes Association Conference, DexCom presented data demonstrating use cases for its CGM products not only in the type 1 diabetic population, but also for type 2 diabetes patients (both on insulin and t on insulin), and even prediabetics. The data also underlined the benefits of using its CGMs alongside therapies like glucagon-like peptide 1 (GLP-1) agonists, which some have feared might pose a threat to diabetes care companies like DexCom.
While GLP-1 drugs might provide answers from some patients with diabetes, including lowering blood sugar levels, these are not the only solution nor do they serve the same function as CGMs. Devices that provide real-time, detailed insights about blood sugar levels are essential to helping diabetics and prediabetics manage their respective conditions. This creates a positive runway for growth for a market leader like DexCom, while highlighting the continued need for its products in an addressable market that is rapidly expanding as the incidence of diabetes grows worldwide.
On the financial front, DexCom has raked in about $639 million in profits over the trailing 12 months with revenue of about $3.8 billion in that same time frame. Its operating cash flow has totaled $803 million in that window, and free cash flow was approximately $524 million. If you're looking for a steadily growing giant in the healthcare space with plenty of room left to expand in its core markets -- and is profitable to boot -- DexCom looks like a solid contender for a long-term investment.
2. Monday.com
Monday.com (NASDAQ: MNDY) is trading up about 30% from the start of the year, about double the total return of the S&P 500 since the beginning of 2024. The company provides a no-code/low-code software platform that helps customers build their own software applications and work management tools.
There are plenty of reasons for organizations of all sizes to favor a no-code or low code platform to create their own apps and solutions. With a no-code solution, companies can make their own tools using an interface that doesn't require any coding experience or training. With a low-code option, the organization can use its own resources to build applications while selecting additional coding to integrate into certain apps as desired, but the company can still streamline project management, optimize visuals, and ensure functionality without getting too tech-heavy.
Monday.com supports all these solutions with an effective software-as-a-service (SaaS) model that generates predictable, recurring revenue streams. In the most recent quarter, it generated record quarterly free cash flow, grew revenue by double digits, and showed a compelling rate of customer retention.
Revenue for the three-month period totaled $216 million, a 34% increase from one year ago. Monday.com also generated about $7.1 million in net income, compared to a net loss of approximately $14.7 million in the same quarter in 2023. While Monday.com did report an operating loss of $5 million for the three-month period, that shrank significantly from the operating loss of $23 million it reported in the prior year's quarter.
Meanwhile, net cash from operations was $92 million in the quarter, with free cash flow coming to just shy of $90 million for the three-month time frame. Monday.com reported an exceptional overall net dollar retention rate of 110%, a metric that indicates how well a company is doing retaining revenue from existing customers. For customers with annual recurring revenue of over $100,000, that net dollar retention rate was even higher at 113%.
Importantly, Monday.com is growing its groups of customers that bring more revenue to the business. For example, its cohort of customers that bring in more than $100,000 in annual recurring revenue rose 55% in the recent quarter compared to the year-ago one. For investors considering a position in the company, it's important to understand that this is a relatively young business (founded in 2012), and it just entered the public markets in 2021.
Investors may witness higher levels of revenue growth than are seen in more mature business, while also contending with the growing pains of a younger venture. Still, its financials are steadily improving, profitability is there, and cash flows are looking good. For investors with a durable buy-and-hold horizon and a well-diversified portfolio, this top growth stock could be a tempting buy.
Rachel Warren has positions in DexCom. The Motley Fool has positions in and recommends Monday.com. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy .
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