If you have $ 1000 and 10 years to wait, buy these 2 stocks now

Technology has reached a point where it leaves no stone whatsoever in the global economy, and this has become increasingly evident in healthcare. Specifically, the confluence of mobility and high-speed internet access, cloud computing and analytics has made remote care over the phone or teleconference a reality – and it turns out that a pandemic is all that. needed to stimulate mass adoption.

Certainly, the economic blockade to stop the spread of COVID-19 has accelerated the growth of telemedicine, and it is a real possibility that the deceleration in growth in 2021 could cause crises for some actions in this area. But if you’ve got some money and ten years to wait, I think Teladoc (NYSE: TDOC) and Am fine (NYSE: AMWL) are shopping right now.

The undisputed leader in telemedicine

In 2015, a very small company named Teladoc, which pioneered a new way to deliver care via the Internet, made its public debut. Fast forward a few years, and Teladoc is quickly becoming a household name in the medical field. But with a market cap of $ 28 billion in a global industry that spends billions of dollars in spending each year, Teladoc is still in the very early chapters of its growth story.

Through steady growth (and the help of smart acquisitions), Teladoc has become the leader in the rapidly growing virtual care industry, both in the US and internationally. Its lead widened in the third quarter of 2020. The company said patient visits with one of its healthcare professionals had more than tripled year-over-year to reach 2.8 million in the last few months. summer 2020, and that revenue was up 109% from a year ago to $ 289 million (or 90% on an organic basis excluding the acquisition of InTouch Health in January).

However, this year’s growth spurt is marked with a small asterisk. COVID-19 has increased the number of patients seeking a virtual visit with a doctor as they shelter in place and maintain their social distance. There is certainly a risk that in-person treatments will regain some favor once the pandemic is over. But I believe the long term potential is still there. Teladoc can handle much more than primary care consultations and has grown into other areas such as hypertension treatment, dermatology and mental health, to name a few. And recently, the addition of digital healthcare specialist Livongo Health (which was also increasing triple-digit percentages and would also have been on this list if it was still a stand-alone business) opens up new doors for the business in areas such as diabetes care. and weight management.

In short, while the pandemic could inflate Teladoc’s growth numbers this year, virtual care has real benefits for patients. It improves patient access to primary care and specialist healthcare professionals, adds convenience to the equation (less trips to the doctor and less waits) and, as a result, saves money on costs. costs. There is a long growth path ahead of this tiny industry. The potential for further disruption to the global healthcare landscape is enormous, and this is still a small company that has taken the lead early on. I think I will remain a buyer for the long term.

A newcomer to the party, quickly disgraced

Alphabet– (NASDAQ: GOOGL)(NASDAQ: GOOG) Backed Amwell is a more recent arrival in the virtual care market. It just completed its IPO in September and shares have more than doubled in the weeks since the start of public trading. But the title has since reversed and is now “only” 20% higher than its IPO price. If you think healthcare technology has a bright future, this is one on your wishlist.

Much like Teladoc, Amwell is also getting a surge in activity on its platform due to the pandemic. In the third quarter, the total number of visits exploded to 1.41 million, down from just 255,000 a year ago. Total revenue also increased 80% to $ 62.6 million. With respectable expansion in its first quarter as a public concern, why have stocks retreated?

On the one hand, Amwell is smaller than Teladoc, so its growth trajectory can be expected to exceed that of its larger counterpart. It should also be noted that Amwell always operates at a loss. Free cash flow (revenue less operating cash and capital expenses) was negative $ 94.1 million in the first nine months of 2020. Gross profit margin also fell to 32.7% for Amwell in the last quarter (up from 45.1% last year) due to marginal patient visits related to the pandemic. For comparison, Teladoc’s gross margin was 62.7% over the past 12 months.

However, Amwell is brimming with $ 1.1 billion in cash and short-term investments and has no debt after its IPO. As it grows, its profitability profile will improve as it has for Teladoc in recent years. And with a current market cap of just $ 5.3 billion, this promising healthcare company is still in its early stages as it helps healthcare providers keep up to date with the technology needed to provide virtual tours. The total number of active providers on its platform of 62,000 at the end of the third quarter compared to just 6,000 last year is an incredibly promising sign. Expect a mad rush for this stock, but if you’ve got the time on your side, it looks like an attractive long-term buy.