We’ve been following DexCom (DXCM) from a distance for a couple of years, as the company has been one of the leaders in the development of continuous glucose monitors (CGMs), notes Mike Cintolo, editor of Cabot Growth Investor.

And DexCom’s latest iteration (dubbed the G6), which just hit the U.S. market in early June (European launch later this year), is by far tops in the sector.

It allows diabetics to see their blood sugar level throughout the day via a sensor implanted under the skin (no blood necessary) with alerts, alarms and analytics (which can be sent to a smartphone) when levels get outside the normal range.

The product is very easy to use, its sensors last 10 days instead of seven, the product and transmitter are smaller than prior versions and it has the most accurate readings in the industry and eliminates the need for finger sticks.

There is some competition in the industry, but (a) this is a big growth market, with CGM use across both Type 1 and Type 2 diabetics expected to increase sharply during the next couple of years due to technological advancements, and (b) the G6’s combination of accuracy, ease of use and range of features makes it the clear technological leader in the space.

The G6 is also approved for patients as young as two years old, vs. 14 to 18 years old for competing products.

Since the launch, demand has been so strong (from both new users and people switching over from either prior DexCom versions or other CGMs) that the company has had trouble keeping up with demand.

But that didn’t stop it from blowing away Q2 estimates (revenues up 42%, accelerating from 30%, 29% and 24% the prior three quarters), which caused the stock to gap up in a big way, lifting out of a three-year base and holding firm since.

Admittedly, it’s not a perfect entry point, and we’ll be using a loose stop down in the mid $100s. But the powerful fundamental story, the strong gap on earnings and the tight action since are enough for us to buy.

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