As markets were selling off throughout 2022, I and many of my fellow Fools were advising investors to use the opportunity to find TSX stocks offering major deals.
Many stocks sold off and dropped in value last year, including high-quality and high-potential growth stocks like WELL Health Technologies (TSX:WELL).
With a potential recession on the horizon and the risk that the market could see another sell-off, WELL is still extremely undervalued. So it’s not surprising that WELL has begun to recover. So far in 2023, it has already gained an impressive 49%.
Therefore, it’s a TSX stock you’ll want to buy soon because if it continues at this pace, the incredible deal won’t last much longer.
But before we get into how cheap WELL is, let’s look at how it makes money and why it’s such an excellent long-term investment.
WELL Health Technologies has impressive operations
The first thing to know about WELL is that while it’s certainly a tech stock, as its name suggests, it also owns physical medical clinics. In fact, WELL is the largest owner-operator of outpatient medical clinics in Canada, with 85 combined clinics.
Furthermore, the TSX stock provides technology solutions to thousands of practitioners across Canada. These include services such as telehealth apps, billing solutions, and cyber security services. Plus, its electronic medical records business serves over 3,500 clinics across Canada, totalling over 22,000 practitioners.
WELL also has many operations in the United States, including CRH Medical, Circle Medical, and WISP. CRH provides services to 127 Ambulatory Surgery Centers across America, Circle Medical omni-channel healthcare services in specialized markets, and WISP telehealth and e-pharmacy solutions that specialize in women’s health services.
WELL’s impressive financial performance
This well-diversified portfolio of high-quality healthcare businesses, many of which are highly defensive, has allowed WELL to grow its sales rapidly in the past. The healthtech continues to have a tonne of potential going forward.
In 2020, the TSX stock managed $50 million in revenue. In 2021, that grew to over $300 million in sales. For 2022, WELL is expected to see over $550 million.
In addition to its incredible sales growth, though, WELL is also earning impressive free cash flow, especially considering it’s still rapidly growing its operations.
And going forward, the TSX stock is expected to continue this impressive growth. Sales are estimated to grow over 15% this year and another 11% next year. Free cash flow is also expected to grow significantly, with estimations it will increase 35% this year and another 17% in 2024.
Plus, WELL could increase this growth potential if it finds more value accretive acquisitions it can make.
WELL Health stock offers one of the best deals on the TSX
Despite an impressive portfolio of businesses and incredible financial performance over the last few years, WELL Health has been one of the cheapest stocks on the TSX for some time. And even after its massive rally to start the year, it continues to offer a compelling valuation.
With WELL trading at roughly $4.20 a share, the stock’s forward enterprise value (EV)-to-revenue ratio is 2.2 times. That’s not just low. It’s also well below WELL’s three-year average of 5.9 times.
Furthermore, its forward EV-to-earnings before interest, taxes, depreciation and amortization (EBITDA) is 12.2 times. That measure of financial health is also considerably cheap for such a strong growth stock.
You can buy this high-potential TSX growth stock as it trades at such an unbelievable deal. WELL is undoubtedly one of the best investments you can make today.