Better Buy in February 2024: WELL Health Stock vs. TC Energy Stock

Given the uncertain outlook, let’s assess which among WELL Health and TC Energy would be an excellent buy right now.

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After a solid performance in the fourth quarter, the Canadian equity markets have turned volatile amid indication from the Federal Reserve that it won’t be in a hurry to slash its interest rates. Besides, the ongoing Isreal-Palestine conflict and the Red Sea crisis have weighed on the equity markets. Meanwhile, I expect the equity markets to remain volatile in the near term as monetary tightening initiatives could impact global growth this year.

Amid the uncertain outlook, let’s assess which among WELL Health Technologies (TSX:WELL) and TC Energy (TSX:TRP) would be an excellent buy right now.

WELL Health Technologies

After delivering over 35% returns last year, WELL Health Technologies has continued its uptrend, rising above 1% this year. Last month, the company reported its initial fourth-quarter performance, with its patient visits growing by 38% year over year. The acquisition of clinical assets from MCI Onehealth Technologies and contribution from its Manitoba clinic boosted patient visits.

The company had 544,000 patient visits in the United States, representing an 8% increase from the previous year. Organic growth from Circle Medical and Wisp businesses boosted its patient visits. Overall, the digital healthcare company had 1.2 million patient visits and 1.9 million patient interactions during the quarter, 18% growth from the previous year. 

Amid this solid operating performance, the Vancouver-based company hopes to post record revenue for the 20th consecutive quarter. Besides, it expects to deliver positive EPS (earnings per share) and adjusted EPS during the quarter. The revenue growth and improvement in its profitability have raised investors’ sentiments, thus driving its stock price.

Meanwhile, I expect the uptrend in its financials to continue amid the growing adoption of virtual healthcare services and the launching of innovative products. Besides, the company’s valuation looks attractive, with its NTM (next 12 months) price-to-earnings multiple and NTM price-to-sales multiples at 14.5 and 1, respectively.

TC Energy

TC Energy is a diversified energy company that stores and transports oil and natural gas across North America. Besides, it operates seven power-generating facilities with a total production capacity of 4.3 gigawatts. The company earns around 97% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) from rate-regulated assets and long-term take-or-pay contracts. So, its financials are stable and predictable, irrespective of the economic outlook.

Amid its stable financials, the Calgary-based energy company has raised its dividend uninterruptedly for the previous 23 years at a CAGR (compound annual growth rate) of 7%. The company currently pays a quarterly dividend of $0.93/share, with its forward yield currently at 7.22%.

Besides, TC Energy has strengthened its financial position by selling its stake in Columbia Gas and Columbia Gulf Transmission for $5.3 billion. With its continued asset divestment initiative, it also expects to generate $3 billion this year. Meanwhile, the company has also planned to make a capital investments of $8 to 8.5 billion this year and $6 to $7 billion annually over the next two years.

Bolstered by these investments, the company’s management is hopeful of growing its adjusted EBITDA at 7% CAGR through 2026. So, it is optimistic about raising its quarterly dividend by 3-5% annually in the coming years. Meanwhile, the company trades at a reasonable valuation, with its NTM price-to-earnings multiple at 13.1.

Bottom line

Given their solid underlying businesses and healthy growth prospects, both stocks look like excellent buys at these levels. Meanwhile, WELL Health is more suited for investors with higher risk-tolerance abilities, while TC Energy would be ideal for risk-averse 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.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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