2 Innovative Companies Fighting The Diabetes Epidemic

As many readers know, I’ve been an avid student of Warren Buffett for many years. Studying his investment methods and applying them to my own analysis has paid off in spades.

One of his most famous adages is, “invest in what you know”.

#-ad_banner-#For better or for worse, something that I know all too well about is diabetes. It’s a condition I deal with every day, and I’ve candidly written about it several times my premium newsletter, Game-Changing Stocks. Diabetes isn’t something that normally comes up during conversations about investing, but today there’s a good reason why I bring it up.

You see, as I’ve previously mentioned inpast articles on StreetAuthority.com , the United States is currently facing a diabetes epidemic. About 3 million Americans currently live with Type I juvenile onset diabetes, including myself. And in 2013, as many as 29 million Americans were living with Type II diabetes.

Today, two-in-three Americans are categorized as overweight or obese and nearly half of adults have either pre-diabetes or diabetes. This condition cost the U.S. economy $245 billion in 2013, according to the American Diabetes Association. And the problem is only getting worse — the Centers for Disease Control projects as many as 40% of Americans will contract diabetes at some point in their lifetime.

This problem is nothing short of an epidemic, and it will take the ingenuity and resources of some of the smartest scientists and companies to help solve the crisis. And for investors, it means opportunity abounds for profit.

That’s why I recommended a diabetes stock to readers of StreetAuthority Daily back in November — DexCom (Nasdaq: DXCM) — which produces continuous glucose-monitoring systems. To be completely honest, I’m not surprised that this pick has done so well.

Having daily experience of the ins and outs of glucose monitoring systems, I knew that DexCom’s products were nothing short of game-changers. And since I first recommended DexCom to my subscribers, it’s posted a hefty 57% gain.

That wasn’t the only stock I recommended though. In my original October issue of Game-Changing Stocks I recommended two other stocks set to profit from innovation in the diabetes space.

One of the stocks rallied 18% since, more than doubling the S&P 500’s 7.2%, while the other rocketed up more than 47%.

To give you an idea of what that looks like in dollar terms, let’s say you invested $30,000 spread equally across the three companies.

Growth Of $30,000
Company Current Value Of $10,000 Invested Return Annualized Return
DexCom (Nasdaq: DXCM) $15,700 57.0% 163.8%
Diabetes Stock #2 $11,800 18.0% 51.7%
Diabetes Stock #3 $14,700 47.3% 135.1%
Total $42,200 40.7% 116.9%

That $30,000 would currently be worth $42,200 in just four months. That’s a 116.9% annualized return.

As happy as I am about these results, this is a trend that’s just getting started. And
I believe I’ve found the next big game changer in the constantly evolving diabetes space

The best part about the opportunity — the company isn’t even publicly traded yet. This leaves plenty of time for investors to prepare for the day that the stock begins trading.

The company, Asante Solutions (Nasdaq: PUMP, not yet trading), has created a game-changing medical device in the diabetes space. It’s an insulin pump, which hits pretty close to home, because I use one.

I’ve studied this product, and I’m willing to use it. It’s just easier.

The insulin pump delivers a small, continuous does of insulin throughout the day, mimicking the body and establishing a baseline, keeping blood sugar in control. Before I eat a snack or a meal, the pump asks what my blood sugar level is and how many grams of carbohydrate am I about to consume. It calculates the proper dose to bring my blood sugar to the proper level and then adds enough insulin to cover the quickly absorbed carbs.

This works pretty well. I don’t ever have to worry about remembering to take my medicine — it’s right there on my belt. My pump holds about three days’ worth.

What I do have to remember is supplies. I have to constantly carry an infusion set, which is a long tube that connects my body to the pump, and a reservoir, which I fill with insulin to load the pump. If I’m away from home, I have to take insulin with me. This is a pain, as insulin is best kept refrigerated.

Asante solves this problem.

It makes a pump that contains the reservoir, the infusion set and the insulin, all in one. It lasts for a week. When the week is up, the user takes it off and throws it away. It is a disposable, one-time use insulin pump.

This is genius. And it squarely challenges Medtronic (NYSE: MDT), the industry’s largest player (and the manufacturer of my own pump).

My insulin pump cost about $8,500. Infusions sets are $17 each and last three days; reservoirs are $10 apiece. Pump therapy costs about $10 a day before insurance. This prices the treatment out of reach for a lot of people. If Asante can deliver a product that offers not only a more pleasant user experience but also generates some cost savings, it will have a winner.

At this point, I think that’s worth betting on.

Let me be very clear though, I’m not recommending that you buy shares the day of the initial public offering (IPO). Instead I’ll be watching to see what happens during Asante’s first week or two of trading, and then will likely buy shares. For subscribers of Game-Changing Stocks I will send out alerts on this to keep everyone in the loop.

In order to stay abreast of this and other developments my subscribers and I are watching, I strongly urge you to check out Game-Changing Stocks. Whether you want to stay up to date on the Asante IPO, find out about the other diabetes related stocks, or want to find out about other stocks with triple-digit gain potential, including a set of Apple suppliers I’ve identified in a brand-new research video, I encourage you to visit this link to learn more.