Most investors are rightfully cautious during this market sell-off. The full economic effects of the COVID-19 pandemic remain to be seen, but what is certain right now is it has already led to a global economic slowdown.
But all this fear doesn’t mean there aren’t opportunities for investors on the long side. One such stock I like right now is Teladoc Health Inc (NYSE: TDOC).
The coronavirus outbreak has everybody concerned about their health. Employers are increasingly requesting their staff to work from home and avoid public places.
Telehealth is a sector focused on providing medical services via digital communication channels. As an example: an individual might have the flu or a sinus infection but does not want to visit a doctor’s office. This person can open the Telehealth program on their mobile/desktop device and speak directly with a licensed medical professional.
The benefits to a customer are incredible. Virtual doctor visits are a lot cheaper ($45 vs $472 for the average claim, according to Teladoc), they save time by avoiding travel, and they protect others by not infecting anyone in the waiting/treatment rooms.
The U.S. Healthcare Cost Dilemma
The U.S. has the world’s highest healthcare cost per capita ($10,586/year). The average cost in wealthy, developed countries is $5,287. On top of that, the U.S. spends the most on administrative costs per capita ($843/year, triple that of the second most expensive) while spending the second-least on long-term healthcare (preventive).
With healthcare costs being that far above the second-most expensive country, you’d expect it to be the leader in terms of quality as well. But that’s not necessarily the case.
Who Will Dominate The Telemedicine Market?
Providing virtual care is great, but both doctors and insurers don’t want to deal with dozens of different platforms. I believe there will only be one or two companies that will handle the vast majority of telehealth services.
I believe Teladoc will be that leader. With over 50 million active users, they currently have the largest market share of any telehealth provider.
When I first recommended this company to my subscribers on March 12, shares were trading at $58. As of this writing it’s at $159, and I believe there still is a lot more upside ahead.
The management at Teladoc has proven to be very effective at executing a sophisticated corporate strategy that focuses on providing the full range of services through internal product development and acquisitions of specialized market leaders.
The coronavirus outbreak is just another catalyst to support this stock. Vice President Mike Pence stated that companies have agreed to cover telemedicine through platforms like Teladoc.
The company has nearly tripled in value over the past 12 months and has a year-to-date performance of 64.4%. The current P/E ratio could be considered overvalued based on current revenue, yet can also be considered a steal considering future growth potential. Based on growth projections, I’m leaning towards the latter.
If you’d like more of these ideas, please click here to join me for an upcoming webinar that will go over how to protect your portfolio, making profitable investments during this downturn, and tools to help you systemize your investing approach.
See more from Benzinga
- David Tepper Says There's 'Nothing Wrong With Nibbling A Little Bit' For Now
- Roku Vs. Netflix: Needham's Laura Martin Sees A Clear Quarantine Winner
- Private Equity Focusing On Primary Care Practices For Their Value And Social Impact
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.