Sometimes, going off the board to find hidden gems is one of the best ways to build wealth. These are companies that are underfollowed by the markets, and as such don’t receive the recognition they deserve.
COVID-19 is changing the landscape of our daily lives. As Albert Einstein once said, “in the midst of every crisis lies great opportunity.” The pandemic is bringing about rapid change, and some companies are taking advantage.
The TSX Index is home to many of these stocks, and today I bring to investors two stocks that are worthy of attention. These hidden gems are positioning themselves to excel in a post-pandemic world.
A healthcare hidden gem
The healthcare sector has been notoriously slow to embrace technology. This is not surprising, as it is primarily reliant on government funding, which comes with considerable red tape. However, the pandemic is forcing the industry to adapt, and business models are changing.
Case in point, virtual medicine is seeing unprecedented adoption. After years of dragging their feet, the Ontario provincial government pushed through billing codes for virtual visits in a matter of weeks. One company that is seeing incredible uptake on their product is CloudMD (TSXV:DOC).
CloudMD is a technology company whose products are tailor made for our new reality. The company is digitizing the delivery of healthcare and is seeing rapid adoption of their flagship CloudMD product.
In the first quarter of 2020, the company recorded $3.1 million in revenue — a 178% increase over the first quarter of 2019. Not surprisingly, this hidden gem is seeing rapid adoption of the CloudMD telemedicine platform and now has over 100,000 registered patients.
In 2022, the company expects to generate $57 million in revenue, up from $11.5 million in 2019. This represents a compound annual growth rate of 70%.
On Thursday, the company began trading on the TSX Venture, which will instantly provide the company with additional credibility. Another potential catalyst, the company’s Livecare telehealth platform is now a preferred vendor of leading government associations.
Investors will want to investigate the company now, as it may not remain a hidden gem for long.
A company set to take flight
Another industry that is set to see rapid change is drone delivery. Given the significant impacts of COVID-19 mitigation efforts, several of Canada’s northern communities are seeing considerable disruptions to their supply chains. Enter hidden gem Drone Delivery Canada (TSXV:FLT).
Drone Delivery Canada is not a new player. In fact, it received plenty of hype a number of years ago when investors first took notice of the potential. Unfortunately, turning concepts into reality took longer than investors wanted, and patience ran thin.
As a result, the company’s stock price has been mired in a downward trend since the beginning of 2018. There is, however, some good news. The company is actively working with the Feds, as there is a need to revolutionize supply chain management to our northern communities. The current pandemic is making this clear, and it is quickly becoming a priority for the government.
One factor that impacts investability is that this hidden gem has yet to generate revenue. Drone Delivery Canada does not have a proven business model. This, however, is rapidly changing. The company’s DSV project is now commercialized and is now revenue generating — a first in company history.
It is also on the verge of commercialization Condor, a drone with a payload capacity of 400 lbs and a travel range of 200 km. Not surprisingly, the pandemic is accelerating the need for this product, and Drone Delivery is accelerating commercial testing. Assuming all goes well, it is likely Condor will be revenue generating by the end of summer.
For investors with an appetite for taking on additional risk, here is another technology company worth looking into.
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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 Mat Litalien owns shares of DOC and Drone Delivery Canada.