Healthcare tends to be a great place to hide during periods of uncertainty, and considering the best telehealth stocks to buy is one way to do more than just hide.
There are several big trends emerging in healthcare right now, and most point to growth in online, at-home medical attention. Perhaps the most compelling is a push to get healthcare costs under control. The runaway cost of healthcare in the U.S. has long been a problem, and one that telehealth providers can help to solve. It’s not just the U.S. can will benefit either. In the U.K., the state-sponsored National Health Service is struggling with dwindling funds and unhappy staff. Telehealth providers can step in to lighten that load.
Plus, do-it-from-home is something that’s likely to stick around even though we’re allowed out. While we saw most people head straight outside to meet friends, go to the gym and travel when lockdowns were lifted, some of the stay-at-home culture remained. Many people still prefer to do day-to-day chores like work and shopping from the comfort of their home. Visiting the doctor fits squarely into the “must-do” rather than “want-to-do” category, so flexibility and efficiency are vital. Telehealth appointments offer just that.
So what are the best telehealth stocks to buy? There are several worthy picks out there, but the three below offer investors a variety of ways to play the trend. From a pure-play that’s jettisoning the industry forward to two big firms that are using telehealth to enhance their existing offerings, here’s a look at three worthy telehealth stocks.
Teladoc Health (TDOC)
The Teladoc logo through a magnifying glass.
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Teladoc (NYSE:TDOC) is a name that always comes up when you’re talking about the best telehealth stocks to buy. The premise behind Teladoc is simple. It keeps a roster of medical experts on the payroll who take patient appointments from varying locations online in exchange for a subscription fee. It’s a business model that’s worked in a whole host of industries — from music streaming to pet care. But it takes time to achieve the necessary scale to make this model profitable, and that’s where Teladoc is struggling.
After becoming a smashing success during the pandemic, investors have been expecting big things from Teladoc. Although growth has been steady, it’s not shooting the lights out. Instead Teladoc has seen its user base growth start to moderate compared to pandemic times. And although margins are growing, they’re not ballooning quickly. Investors were quick to abandon Teladoc once lockdowns were over, but the group sill has plenty of potential.
For those with a long-term view, Teladoc is well positioned to remain a leader in the space. And as more employers look for ways to trim their insurance costs amid inflation, swapping in cheaper, online doctor visits will be an enticing option. Shares are currently valued lower than they have been on a price-to-sales basis, meaning this could be an attractive entry point.
CVS Health (CVS)
The front sign for a CVS Pharmacy, CVS stock
Source: Susan Montgomery / Shutterstock.com
When you think of the best telehealth stocks to buy, CVS (NYSE:CVS) probably doesn’t spring to mind.
CVS is best known for its chain of pharmacies, but it’s got fingers in just about every pie in the healthcare space including a pharmacy benefit manager business and a health insurance arm. This vertical integration makes CVS a great candidate to grow telehealth. The group works with a handful of providers to offer telehealth visits in its Minute Clinics across the country. This makes the clinics even more valuable because there’s a 24/7 service allowing basic healthcare advice and prescription refills.
By integrating telehealth into its business, CVS is positioning itself to be a leader in the healthcare space. The options are not only in demand, but they’re cheaper than other alternatives — like employing healthcare specialists 24/7 within the Minute Clinics. It’s a win-win for both customers and CVS. Plus, as the group continues to march forward with its online offerings, we could eventually see CVS bring a smaller telehealth provider under its umbrella.
WW International (WW)
WW studio, formally Weight Watchers location. WW offers including healthy lifestyle options such as weight loss, maintenance, and fitness.
Source: Jonathan Weiss / Shutterstock.com
Weight Watchers parent WW International (NASDAQ:WW) is another company that might seem an unusual pick for the best telehealth stocks to buy. This company offers more of a niche play on the space, but one that could grow quickly over the next few years.
Weight Watchers is a lifestyle program that helps its members lose weight, and the company recently acquired telehealth platform Sequence. Sequence is a subscription telehealth platform that delivers medical advice and obesity drugs for users aiming to lose weight. By combining the medical side with support to make lifestyle changes, Weight Watchers is a compelling choice for people who need to shed excess weight.
The enhanced offering not only creates a compelling proposition for potential members, it makes for a compelling investment case as well. WW is leveraging the growing popularity of telehealth and positioning itself to take a slice of the hypergrowth obesity drug market. This is a market that’s expected to balloon from just $2.4 billion in 2022 to $54 billion in 2030.
On the date of publication, Marie Brodbeck did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marie Brodbeck has a Finance degree from Duquesne University and has been a financial journalist for more than a decade. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.
