3 best growth stocks to buy now – The Fool Motley

A cash dispenser

Anders Bylund (Micron Technology): I understand if you are a little afraid of owning Micron now. The chip maker has seen chip prices decline over the past year, resulting in a sharp drop in the company's revenue and free cash flow:

Data by YCharts.

That's it for "it's different this time," right?

Yes, except that this slowdown is really different. The last two downward price swings in DRAM and NAND memory result from Samsung flooding the market with an excess supply of cheap chips, driving the weakest companies out of the market and reducing construction costs, from smartphones to consumer electronics devices with memory. The Korean company is perhaps the largest memory provider on the planet, but this operation is still a secondary activity in Samsung's massive business operations.

This swing is really different. Prices are falling because Samsung and its friends are selling fewer phones these days. Several lines of life are on the horizon, including a proliferation of Internet of Things devices and perhaps a new spark of interest for smartphones when 5G networks (and devices that can connect to them) begin to appear in the wild. But this is yet to come, and trade tensions between Beijing and Washington do not help this American company find new customers in the world's largest electronics manufacturing center.

These questions will pass. Without the Sino-US trade dispute, I'm not sure we would have seen a decline in Micron's cash income and profit – a stabilization, perhaps, but not a fall.

In addition to that, take a second look at the table above. The long-term trend can be chaotic, but undeniably positive. And we are looking for an absolute cash dispenser. Over the last four quarters, Micron has converted $ 7.65 billion of total free cash flow sales of $ 30 billion, which equates to a 26% cash flow margin. Does this sound like a business in trouble to you?

This does not suit me, but market officials do not agree. Today, Micron's shares are trading at valuation at a windfall of 3.7 times net profit, or 5.8 times free cash flow. I think it's a big mistake. Expect the action to return to its winning methods in the long run when the current turbulence fades. Despite falling 39% from its 52-week high, Micron's investors pocketed a 700% return over the last five years. There will be more of this goodness to come.

Source of the image: Getty Images.

It's time to buy this virtual leader of health

Todd Campbell (Teladoc): In the United States, patients visit the doctor nearly a billion times a year. Although most of them go to physical offices, more and more people are using their smartphone, tablet or computer more and more to see a doctor.

Teladoc is at the forefront of this radical change. The company connects patients and doctors for various health problems, from chronic illnesses to influenza. It even provides a second opinion of specialists via telehealth solutions. Last quarter, its virtual visits topped the million mark for the first time, with growth of 75% over the previous year. As a result, the company's total business turnover reached 129 million. Even if you remove visits and revenue growth from acquisitions, Teladoc experienced organic growth in visits and revenues of 29% and 23% last year.

About 82% of its revenue comes from subscriber fees paid by third parties, including insurers, health systems and self-insured companies. These clients pay a fixed fee for members to access the virtual tours because they are considerably less expensive than traditional office visits. For example, a virtual tour costs $ 472 less than a visit to the office, according to Veracity Analytics, an independent health care data analysis company. The remaining 18% of Teladoc's revenues come from fees per visit.

Currently, Teladoc's solution is available to 27 million people through subscription access relationships, but this only touches the surface of this mega opportunity. In addition to creating new accounts, management believes that expanding existing relationships could provide access to 50 million more people. In addition, more than 20 million Medicare Advantage members could have access to telehealth services by 2020. In addition, the company's expansion into Europe, opening the door to a population of over 500 million. ;inhabitants.

Despite a tremendous opportunity, Teladoc's stock price dropped after a report by a short seller challenged a benchmarking marketing program for its mental health business. ################################################################################ 39 last year and the departure of its chief financial officer after insider trading allegations in December. However, the referral program represents only about 5% of new mental health members, and a new CFO will eventually be hired. Given the huge market potential and strong growth in sales, the recent sale of equities could make this an opportunity to add this telehealth title to growth portfolios.