Why I Invested $2,000 in This Unknown Tech Stock

The adoption of telemedicine was inevitable. But now that everyone is isolating at home, the future has been pulled forward. WELL Health Technologies (TSX:WELL) is my top pick.

| More on:
Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization

Image source: Getty Images

At the height of last month’s panic, I was busy investing in stocks that had been on my radar for years. Some of the most attractive brands and robust growth stocks seemed like they were finally trading below their intrinsic value.

One of these overlooked opportunities was a telemedicine startup that lost nearly half its value. I invested $2,000 in it. 

Vancouver-based WELL Health Technologies (TSX:WELL) seemed like an attractive growth stock for years. The startup has been trying to revolutionize the healthcare industry through sophisticated, data-driven platforms. Here’s why I added this intriguing growth star to my long-term portfolio at the height of the COVID-19 pandemic. 

Immense growth opportunity

WELL Health says its mission is to modernize healthcare. The team does this in two ways: offering a medical data management platform to healthcare professionals and managing data-driven clinics of its own.

Indeed, 8,200 doctors across 1,446 clinics already rely on the digital data management platform. Meanwhile, the company has acquired 20 clinics across British Columbia to serve patients directly. 

Healthcare in Canada is a trillion-dollar industry. It’s also uniquely ripe for disruption. Doctors and clinics don’t have the sophisticated digital strategy they need to serve patients efficiently. This lack of digital telemedicine services is more apparent now while Canadians are self-isolating at home and could need medical attention remotely. 

Telemedicine

Recognizing this opportunity, WELL Health recently acquired a telemedicine startup and rebranded it as VirtualClinic+. The digital platform connects users with medical experts through text, voice and video conferencing. 

According to industry experts, the telemedicine industry was worth US$41 billion in 2019. It’s expected to grow at an annual compound rate of 15% over the next decade. In fact, with the ongoing pandemic and long-term social distancing measures, the industry could grow even faster.  

Robust performance

WELL Health has already demonstrated an ability to capitalize on this rapid expansion. Annual revenue has tripled over the past year. Gross margin expanded from 29.7% to 33.5% over the same period.

The company also has $15.6 million in cash and cash equivalents on its books. The company expects another boost in sales and operational profitability in 2020. 

The startup is also backed by Hong Kong’s richest person: Sir Li Ka-shing. The nonagenarian billionaire property magnate owns roughly 18% of the company and some of its debentures.  

Although it is losing money — like any other startup — I believe the company could break even soon given its lucrative gross margins and rapidly expanding sales. I added the stock to my portfolio as a long-term bet on the future of healthcare in Canada and across the world.  

Bottom line

The adoption of telemedicine was inevitable. But now that everyone is isolating at home, the future has been pulled forward. Tech-driven startups like WELL Health could change the way critical care is delivered across the country.

If the company gains traction, it could soon be worth multiple times its current value. The opportunity in Canada alone is worth trillions.

Given the correction, I added this stock to my long-term growth portfolio. I encourage you to take a closer look as well. Stay safe!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor VRaisinghani owns shares of WELL.

More on Tech Stocks

consider the options
Tech Stocks

Top 2 Beaten-Down Stocks I’ve Not Given Up on

The massive correction in the prices of these TSX stocks presents a solid buying opportunity at current levels.

Read more »

Various Canadian dollars in gray pants pocket
Tech Stocks

2 Cheap Stocks (Below $50) to Buy and Hold Till 2032

The inexpensive valuations and rapid growth will help these Canadian companies outperform the TSX by a wide margin.

Read more »

Couple relaxing on a beach in front of a sunset
Dividend Stocks

Canadians: 3 Easy Stocks to Invest in for Retirement

It’s never too early to begin retirement planning. Adding the right mix of stocks to an RRSP can grow your…

Read more »

TIMER SAYING TIME FOR ACTION
Tech Stocks

3 Growth Stocks to Buy Before it’s Too Late

These growth stocks were once greats, and now they're gross to even consider. But honestly, I'm asking you to consider…

Read more »

Family relationship with bond and care
Tech Stocks

Retire Young: 2 Cheap Growth Stocks to Buy Now and Hold Forever

There are huge sales on growth stocks in the tech sector. Here are two top picks to put on your…

Read more »

A worker uses the cloud for paperless work. tech
Tech Stocks

3 Tricks to Finding Undervalued Canadian Stocks

There are plenty of cheap Canadian stocks, but not all are undervalued. Yet this one certainly ticks all the boxes.

Read more »

Tech Stocks

Lightspeed Stock: Could a Holiday Rush Save the Tech Stock?

Lightspeed (TSX:LSPD)(NYSE:LSPD) stock continues to have near-term issues, but in the long term, this could be a stock everyone wants…

Read more »

question marks written reminders tickets
Tech Stocks

Is Evertz Technologies (TSX:ET) Stock a Buy After Q1 Earnings?

Evertz Technologies (TSX:ET) stock appears undervalued and offers a high dividend yield and growth potential. Watch identified challenges.

Read more »