2 Healthcare Stocks That Could Outperform the Market Over the Next Decade

One of the most challenging things to do when the stock market hits a rough patch -- as it recently did -- is to stay focused on the long-term. However, that's exactly what investors should do. Staying invested in great companies while purchasing shares of new ones, especially when others are panic-selling, remains a great formula for earning amazing long-term returns. With that said, let's consider two stocks -- both in the healthcare sector -- that may be great buys right now, considering their prospects: TransMedics Group (NASDAQ: TMDX) and Dexcom (NASDAQ: DXCM). Here's why these companies could beat broader equities over the next 10 years.

Image source: Getty Images.

Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »

1. TransMedics Group

TransMedics Group is a medical technology specialist that is looking to revolutionize the organ transplant niche of the industry. One common problem in this market is that the conventional cold storage method used to store and transport organs often leads to them deteriorating and being unusable for transplant. TransMedics Group developed the Organ Care System (OCS) for that reason. It is a portable device that mimics the physiology of the human body and maintains blood and oxygen flow to organs.

The OCS is approved for hearts, livers, and lungs. For all three, the usage rate from organs stored with TransMedics' technology is much higher than that of the cold storage method. So, the technology is clearly useful, and that's why the OCS has experienced increased adoption, leading to rapidly growing revenue and earnings for TransMedics Group. In 2025, the company's top-line of $605.5 million was 37% higher than the previous fiscal year, while its earnings per share soared to $4.87, up from $1.01.

Business is good for TransMedics Group, and several things could help the company perform well through the next decade. First, TransMedics Group could launch the OCS for kidneys to expand its addressable market. Second, the company has been aggressively expanding in Europe, another initiative that could boost its market opportunity. Third, TransMedics Group's National OCS Program (NOP), a service platform that handles everything from organ retrieval to transport and delivery, has given it greater control over logistics.

Instead of relying on third-party transportation, which sometimes led to delays and other issues, TransMedics Group has taken matters into its own hands. Meanwhile, the organ transplant market should continue growing at a good clip. TransMedics Group is well positioned to capitalize on this, given its highly innovative platform. That's why the healthcare stock could beat the market through 2036.

2. Dexcom

Dexcom develops continuous glucose monitoring (CGM) devices. Diabetic patients use these to track their glucose levels in real time throughout the day. The advantage of CGMs is that they make measurements as often as every five minutes and can send alerts when a patient's blood sugar level falls outside a "safe" range.

And as these devices continue to demonstrate their ability to improve outcomes, third-party coverage has increased, as has adoption among patients. Dexcom's financial results are pretty strong as a result. Last year, the company's revenue totaled $4.7 billion, 16% higher than the prior fiscal year. Dexcom's earnings per share were $2.09, much higher than the $1.42 reported in the year-ago period.

Some might think that Dexcom's long-term prospects are in trouble, given the increased popularity of GLP-1 weight loss medicines. However, as management has said several times, physicians actually prescribe GLP-1 therapies alongside CGM devices. It's not one or the other. Further, Dexcom has barely tapped into the vast worldwide addressable market. A few years ago, only about 1% of patients with diabetes used CGM.

While many of those are in second or third-world countries where Dexcom doesn't do business, the company has made it a habit of entering new territories. Lastly, Dexcom has expanded beyond the diabetes population with the launch of Stelo in the U.S., an over-the-counter CGM option that prediabetic patients can use. Millions could still benefit from Dexcom's tech, and, given that it is one of the leaders in this market, it is well-positioned to ride this tailwind and deliver strong returns over the next 10 years.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TransMedics Group. The Motley Fool recommends DexCom and recommends the following options: long January 2027 $65 calls on DexCom and short January 2027 $75 calls on DexCom. The Motley Fool has a disclosure policy.