There’s been a lot of selloffs this year which can make investors short-sighted. But if you are a long-term investor, this means an excellent opportunity for you. One area of opportunity is the healthcare sector.
Some popular names in the healthcare sector have been down even by about 50% from their highs recently. But there are lots of opportunities in this sector. The three stocks highlighted in this article might be below their all-time highs today, but they have solid fundamentals and fantastic growth opportunities that add to their attractiveness.
1. Teladoc Health
Teladoc Health (NYSE: TDOC) (68.94 USD) is a telehealth company that investors have loved since its launch. The 2020 lockdowns resulted in a massive jump in business for the company, with revenue growth of 98% year over year to $1.09 billion in 2020. In addition, a recent acquisition of Livongo for $18.5 billion contributes to the company’s recent growth and specialization in the treatment and management of chronic diseases.
With the lockdowns of historical importance, management is forecasting a modest trajectory of growth through 2024 of about 25% to 30% per year. This slowdown, coupled with the fact that this year has seen lots of selloffs in the market, has punished the stock.
But the fundamentals are sound. It has a forward-looing growth forecast based on the covid lockdowns' revenue growth. The stock is now cheaper than before, and the valuation has fallen, but recent programs show that investors will gain a lot moving forward by buying the stock now when it’s cheap.
Novocure Limited (NASDAQ: NVCR) (77.89 USD) is in the business of treating one of the terrible diseases that can afflict humans - cancer. Apart from its use of chemotherapy which is the traditional treatment model, NovoCure has pioneered a novel method of treating cancer with low-intensity electrical fields called Tumor Treating Fields (TTF). NovoCure also markets a device, the NovoCure Optune device, used to administer this treatment.
Studies discovered that these electrical fields inhibit cancer growth by disrupting how quickly they can divide or multiply. As a breakthrough treatment different from chemotherapy, they target cancer cells without affecting or damaging healthy surrounding tissue cells. The FDA has approved the device for treating new and recurrent glioblastoma and mesothelioma, malignant tumors.
The NovoCure stock has slowed in recent times because it is still waiting for FDA approval to expand its treatment options for the device. Investors are worried that it’s been treating the same types of cancer for a long time. But the company has its eyes on ovarian cancer, pancreatic cancer, and non-small cell lung cancer (NSCLC). If the approval is given, NovoCure’s stock will benefit a lot because these types of cancers are known to increase the growth opportunities of health care companies dramatically. New approvals are expected this year.
3. Hims & Hers Health
Hims & Hers Health (NYSE: HIMS) (5.01 USD) is a virtual healthcare delivery company, just like Teledoc. It aims to tap into the growing demand in this sector. Already, it has a strong consumer brand. The target market for its products is young adults, and it treats ailments such as erectile dysfunction, hair loss, and acne. Recently, it has started offering treatment for mental health issues. Hims & Hers has made it easy for patients to speak to healthcare professionals and then have their drugs delivered to their door through a subscription service.
The company’s marketing is resonating with its target base. From a mere 431 thousand telehealth appointments in 2018, the company has grown to 4.6 million telehealth appointments in Q3 of 2021. In addition, membership growth in Q3 2021 was 95% year over year.
But investors have not taken notice of the growth and the company’s prospects. That is why it is a good buy. If it continues to beat forecasts, it will steal the limelight from other telehealth companies. Tell me what you think about these companies in the comment section.