Why This Beaten-Down Medical Device Stock Could Be Your Best Investment for the Next 5 Years

Medical device specialist DexCom (DXCM 2

Nevertheless, The company's financial results haven't been quite up to the market's standards, and broader market volatility caused by President Donald Trump's trade policies isn't helping either

Yet even with all these challenges, DexCom could be a terrific performer in the next five years (remarkable data)

Here's why, given current economic conditions

Moreover, There's plenty of white space ahead DexCom continuous glucose monitoring (CGM) systems, which are devices that help track blood sugar levels in patients with diabetes, in light of current trends

However, On the other hand, CGMs have at least two advantages: They make measurements automatically, and they make them as often as every five minutes

Consistently monitoring blood glucose levels helps people with diabetes make better health decisions, in today's financial world

Conversely, That's why CGM devices lead to imved outcomes, including less time spent in hyperglycemia

Moreover, Image source: Getty Images

DexCom has significantly increased its installed base over the years

Moreover, However, the company remains well-positioned to capitalize on a massive global opportunity. , DexCom estimates that there are more than 4

And that's just the U (quite telling), given the current landscape

At the same time, , one of the more advanced countries in terms of CGM penetration

DexCom has typically targeted patients who use insulin, and third-party payers have been more willing to cover these populations

On the other hand, However, last year, it launched Stelo, an over-the-counter CGM option for diabetes patients who aren't on insulin and for people with prediabetes

This move significantly expanded the company's addressable market

CGM penetration in the U, in this volatile climate

DexCom's opportunities both within and outside the U

This analysis suggests that increased adoption of CGM nology has helped its revenue and earnings grow steadily over the past decade, and this trend is ly to continue

DXCM Revenue (Annual) data by YCharts

DexCom's s declined last year due to poor financial results; in the U. , more patients than the company expected took advantage of rebates, leading to lower-than-expected revenue per customer, in this volatile climate

However, since there's still plenty of work to be done in the CGM market, DexCom can address that issue as it continues to make even more headway in this field

That will allow its financial results to imve

Are DexCom's s too expensive

The stock's forward price-to-earnings ratio was recently 41. 5, much higher than the healthcare sector's average of 15

On the other hand, But that forward P/E is on the low end compared to DexCom's average over the past few years: DXCM PE Ratio (Forward) data by YCharts

On the other hand, The medical device specialist has historically had steep valuation metrics, but has dered market-beating returns anyway

In my view, DexCom can do the same in the next five to 10 years

Investors might also be concerned DexCom's main competitor in the CGM market, Abbott Laboratories

But these rivals have battled it out for years, and there's more than enough space for both to be successful, given the large worldwide CGM opportunity, given the current landscape

Furthermore, DexCom benefits from a network effect, as multiple companies have developed devices for diabetes patients that are compatible with its nology; these include insulin pens and pumps, third-party apps, and the Apple Watch, considering recent developments

The more DexCom's installed base increases, the more attractive its ecosystem becomes to device or app developers looking to target a large population of patients, amid market uncertainty

And as these companies launch more nologies compatible with DexCom's CGM devices, they also become more appealing to patients

This dynamic makes it ly that DexCom will remain a leader in CGM well beyond the next five years, amid market uncertainty

In the meantime, the stock could rebound from its poor performance last year, and der superior returns through the end of the decade.