One of many high growth areas of the market in the course of the pandemic has been the digital healthcare market. Certainly, traders in Effectively Well being Applied sciences (TSX:WELL) have accomplished very properly for themselves over the previous 5 years. Shares of Effectively Well being inventory are up from round $0.10 per share to greater than $7 per share on the time of writing. These are some fairly spectacular good points.
Nevertheless, over the previous yr, Effectively Well being inventory has just about traded sideways. It seems traders are trying via the pandemic to what might be a brand new regular. How inclusive this new regular is to digital healthcare suppliers stays to be seen.
Herein lies the query most traders are asking. Can Effectively Well being inventory proceed to rise over the long run, or was this a one-hit marvel?
Right here’s why I believe this rally might not be over but.
Analysts give Effectively Well being inventory a thumbs-up
First, I believe it’s necessary to try what the consultants take into consideration Effectively Well being inventory. On this regard, it seems the long run appears to be like vibrant for this inventory.
Analysts level to numerous components which can be bullish for Effectively Well being. The truth that this firm provides a spread of bodily and digital choices is bullish for long-term traders fearful about diminished income from the corporate’s digital phase. Effectively Well being has been diversifying its publicity and appears stronger in consequence. Over the long run, this supplies a moat relative to different pure-play shares on this sector.
Moreover, the assorted acquisitions and strategic strikes made by Effectively Well being might quantity to greater than US$400 million in income yearly going ahead, in response to analysts. With a market cap of round US$1.2 billion, that’s a price-to-sales ratio round three. For a development inventory like this, that’s actually not unhealthy. Actually, that’s an inexpensive valuation given the expansion potential Effectively Well being inventory supplies.
Ought to the Delta variant present a surge in coronavirus circumstances, and healthcare suppliers rely extra closely on their digital choices, Effectively Well being ought to profit in such an surroundings. Moreover, healthcare suppliers are actually utilizing digital healthcare options to distinguish their choices and as a advertising instrument to draw new members. Till this adjustments, it’s doubtless Effectively Well being’s companies will stay in excessive demand, not less than over the close to to medium time period.
Effectively Well being is a wonderful development inventory I’m contemplating proper now. Certain, this can be a inventory that has considerably flatlined of late. Nevertheless, a number of quarters of stable income development, and this image might change.
I just like the path the corporate is transferring with its diversification strikes. I additionally suppose the COVID pandemic isn’t accomplished but. Accordingly, traders on the lookout for some defensive development ought to contemplate Effectively Well being inventory as we speak. It’s one of many cheaper development choices out there proper now, with moderately spectacular upside.
This text represents the opinion of the author, who could disagree with the “official” advice place of a Motley Idiot premium service or advisor. We’re Motley! Questioning an investing thesis — even one in every of our personal — helps us all suppose critically about investing and make selections that assist us turn into smarter, happier, and richer, so we typically publish articles that might not be consistent with suggestions, rankings or different content material.
Idiot contributor Chris MacDonald has no place in any shares talked about on this article.