Got $1,500? These 2 COVID Stocks Are Firing On All Cylinders

At the start of the pandemic, diagnostic tests for the coronavirus were in extreme demand. Making a test for a new virus isn’t exactly difficult, and the sheer scale of the world’s need provided an opportunity for a handful of enterprising companies to jump into the new market. And now that the peak of the testing gold rush is over, some of those competitors are still making money at full steam.

Today, I’ll be discussing two diagnostic companies that are transforming themselves into sustainable engines of growth using the income they made from producing coronavirus diagnostics. Both of these businesses are strongly profitable, with net margins well above 45%, and their futures look bright. While there’s no avoiding the fact that their coronavirus testing revenue is falling, they’re taking it in stride, and they just might be a good fit for your portfolio as they enter their next acts. 

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1. Fulgent Genetics

Fulgent Genetics (NASDAQ:FLGT) is one of the coronavirus testing market’s biggest winners, and its momentum is still holding strong more than a year after its debut. Compared to its wild second quarter of 2020, in Q2 of this year, its revenue exploded by just shy of 790% year over year.

Though coronavirus diagnostic testing has been the primary driver of the company’s revenue since the start of the pandemic, its main line of business is in genomic testing for a variety of purposes, and that’s what is already starting to carry its ongoing growth. For example, when people are interested in learning whether they’re a carrier of a hereditary condition, Fulgent makes tests for that. In clinical settings, hospitals also rely on its tumor profiling tests to help inform the appropriate course of treatment for certain cancers.

And with its coronavirus diagnostic revenue in hand — which is expected to total $690 million this year — Fulgent has unprecedented leeway to expand deeper into these other testing verticals. Not to mention chasing even more revenue from new coronavirus products, like its at-home SARS-CoV2 antibody test that launched on Oct. 27. In August, it acquired CSI Laboratories, a private cancer testing company. Although investors won’t know how much the acquisition is worth in terms of immediate new revenue until Fulgent reports earnings for the first time since the purchase on Nov. 9, CSI will be crucial to the company’s growing cancer testing segment. The acquisition will also add new capacity to its other genetic testing services. In this vein, Fulgent also recently invested $20 million in Helio Health to commercialize its early cancer detection tests.

Moving forward, Fulgent is planning to focus on China as its primary international market. Even with sales of coronavirus diagnostics slowing down, expanding there will drive significant growth. If things go according to plan with its Chinese joint venture and its new income from CSI Labs, management is expecting…