Is a Short Squeeze on the Cards for WELL Health Stock?

Here’s why WELL Health stock is all set to add to its 14% gain this week.

| More on:
thinking

Image source: Getty Images

Short-sellers have had a tough time in recent days. Retail traders have initiated multiple short squeezes on stocks such as AMC Entertainment, BlackBerry, GameStop, Sundial Growers, and Clover Health. In fact, Clover Health stock was up 85% yesterday and has surged over 20% in pre-market trading today. Clover Health’s trading volume was around 723 million shares on June 8, and it’s quite evident that the Reddit army has taken charge, sending the stock to record highs. 

Another stock that is on the radar of retail traders is Canadian company WELL Health Technologies (TSX:WELL). While WELL stock has a high short-interest ratio, it is also fundamentally strong compared to the other stocks discussed above, making it a better bet right now. 

Why is WELL Health stock a solid long-term bet?

WELL Health continues to grow rapidly via accretive acquisitions. It just completed a $206 million acquisition of “MyHealth,” making it the largest private clinic operator in Canada. This is one of many major acquisitions the company has closed in 2021. Earlier this year, it announced a $372.9 million acquisition of CRH Medical, which significantly increased the company’s footprint south of the border.

The CRH Medical acquisitions led to JP Morgan extending an existing credit line by US$100 million, while Royal Bank of Canada provided another $200 million via a secured credit facility to close the MyHealth buyout.

This all comes on the back of a recent $305 million financing that was priced at a 25% premium to WELL Health’s stock price. The investment round was led by the 29th richest man in the world, Sir Li Ka-Shing. Since then, the company has been on an acquisition spree, positioning itself as a true multi-channel digital healthcare leader.

These developments have garnered attention from major institutions like JP Morgan and RBC as well as from renowned law firm Fenwick & West, which helped companies like Facebook, Amazon, Cisco, and Coinbase with their IPOs. 

WELL Health has officially engaged Fenwick & West to assist them with an IPO to list on the NASDAQ in Q4 of 2021. Investors should note that digital health companies in the U.S. are trading at a far higher multiple compared to WELL Health. In fact, WELL stock is trading at a significant discount and should gain momentum to end the year at a higher price. 

What’s next for WELL Health investors?

While most meme stocks have underperformed the broader markets prior to the short squeezes, WELL Health stock has been on an absolute tear. In fact, the stock is up a staggering 8,000% since its IPO. In the last two trading sessions, shares have surged close to 14%.

Even after its phenomenal performance, WELL Health shares are trading 12% below all-time highs. Its low price-to-sales multiple and rising profit margins make it a top bet for 2021 and beyond. While most meme stocks will take a breather once normalcy returns, WELL Health should continue to move higher and generate outsized returns to investors.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool owns shares of and recommends Amazon and Facebook. The Motley Fool recommends BlackBerry and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

More on Tech Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

This Dividend Stock Just Jumped 10%! Time to Buy?

This dividend stock is way up after being included in a major index, making it a prime time to pick…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

This is the Best AI Stock to Buy Right Now

Investors have a wide selection of AI stocks to choose from, although the best buy today is not the most…

Read more »

grow dividends
Tech Stocks

If This Fast-Rising Stock Isn’t Yet on Your Radar, it Should Be!

Here's why Constellation Software (TSX:CSU) remains a top TSX growth stock long-term investors ought to consider right now.

Read more »

cryptocurrency, crypto, blockcahin
Tech Stocks

1 Cryptocurrency Stock Soared 8% This Week, and it’s the Only 1 I’d Buy

Cryptocurrency stocks can be a dime a dozen, which is why this one stock stands out from the rest as…

Read more »

A bull outlined against a field
Tech Stocks

Bull Market Buys: 1 Magnificent Stock to Own for the Long Run

Here's why investors can consider gaining exposure to tech stocks such as Shopify in the ongoing bull run.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Why Shares of Celestica Stock Jumped 5% on Monday

Celestica (TSX:CLS) stock continues to see its share price rise higher, but not only because shares of Nvidia (NASDAQ:NVDA) are…

Read more »

Make a choice, path to success, sign
Tech Stocks

The Best and Worst Canadian Stocks So Far in 2024

The recent rate cut could benefit two Canadian stocks but would not lift two underperforming tech stocks.

Read more »

question marks written reminders tickets
Tech Stocks

Could This Under-the-Radar Canadian Stock Be the Next Shopify?

An under-the-radar Canadian stock could be the next Shopify, given its market-beating and stellar returns thus far in 2024.

Read more »