2 Brilliant Stocks to Buy With $200 and Hold for 5 Years

While being an innovative company doesn't guarantee superior long-term returns, it doesn't hurt those chances either. In fact, when a corporation is making important breakthroughs and boasts significant growth prospects in its industry, that could translate to above-average stock market performances over five years or more.

That description fits TransMedics Group (NASDAQ: TMDX) and Exact Sciences (NASDAQ: EXAS), two innovative healthcare leaders. Here's why these companies could deliver strong returns through the end of the decade.

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1. TransMedics Group

TransMedics Group developed a revolutionary way to store organs before transplants. The company's Organ Care System (OCS) mimics the physiology of the human body, resulting in a higher usage rate for the organs it is approved for -- lungs, hearts, and kidneys -- than the traditional cold storage method. In a clinical trial, 32% of hearts kept in cold storage were used in a transplant, versus 81% for the OCS.

The company's technology is superior; that's why it has gained traction. TransMedics Group has encountered some issues recently. The company's revenue growth slowed, while its guidance disappointed investors. Further, the medical device specialist became the target of serious allegations from an activist short-seller.

However, TransMedics Group is rebounding, partly thanks to recent stronger-than-expected first-quarter results. TransMedics Group's stock jumped by about 20% on the heels of its most recent quarterly update. Still, the company's shares remain down by 11% in the past year, and there could be significant upside potential for the company in the next five years. TransMedics Group estimates that deceased donations of organs will continue to increase in the next few years.

Meanwhile, there are more people in need of organs than the number of those willing to donate theirs. For the ones available, keeping them in the best possible shape for transplants is incredibly important. TransMedics Group's OCS is one of the better options on the market for doing just that. So, the company should continue growing its revenue and earnings at a good clip in the next five years, and likely beyond that. And in the meantime, the company could deliver excellent returns to investors. Investors can buy one of TransMedics Group's shares at current levels with $200.

2. Exact Sciences

Exact Sciences is a healthcare company that develops cancer diagnostic tests. The company is best known for Cologuard, a non-invasive, at-home test for colorectal cancer (CRC) -- the second leading cause of cancer death worldwide. The fact that the disease is highly treatable when caught early, and yet kills as many patients as it does, suggests that not enough eligible people are getting screened.

For those at average risk of CRC, it is recommended to start screening at 45 years old. Exact Sciences has made significant headway in this market. It first earned clearance for Cologuard in the U.S. in 2014; by 2022, it had been used to screen 10 million patients.

Exact Sciences has encountered some headwinds in the past few years, including slower revenue growth and persistent net losses. However, recent developments could help the company fix this issue. In October, it earned approval for the next-gen version of its crown jewel, Cologuard Plus. This newer test proved superior at identifying true positives and false negatives, and should, therefore, help attract even more prescriptions from otherwise skeptical physicians. The new Cologuard is also 5% cheaper to manufacture.

That should make a meaningful difference in the company's costs across millions of tests. Further, Exact Sciences recently launched Oncodetect, which is designed to check for cancer recurrence in patients across several solid tumors.

Lastly, Exact Sciences plans to debut another product later this year, a multicancer-detecting test called Cancerguard. With these new products and the company's well-established Cologuard franchise, expect stronger revenue growth and, eventually, net profits before the end of the decade. The stock could deliver superior returns. Exact Sciences' shares are trading hands for just under $54, so $200 is good for three.

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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 Exact Sciences. The Motley Fool has a disclosure policy.