The last six months were rewarding for equity investors as the S&P/TSX Composite Index rose 14.4%. Solid quarterly earnings, easing inflation, and rising commodity prices have driven the equity markets. However, the following three stocks failed to participate in this rally for several reasons. Meanwhile, their long-term growth prospects look healthy, thus offering attractive buying opportunities.
WELL Health Technologies
WELL Health Technologies (TSX:WELL) offers technologies and services to aid healthcare providers in improving patient outcomes. Compared to its 52-week high, the company has lost over 35% of its stock value. Although WELL’s topline increased by 48% in the December-ending quarter, its adjusted net income fell 10.4% to $11.2 million. Besides, its subdued 2024 guidance has also weighed on the company’s stock price.
I believe the sell-off is overdone, with WELL Health currently trading at NTM (next 12 months) price-to-sales and NTM price-to-earnings multiples of 13.2 and 1, respectively. The growing digitization of clinical procedures and adoption of telehealthcare services has expanded the company’s addressable market. After expanding its business through an aggressive acquisition strategy, the company now focuses on organic growth. It is developing innovative products to strengthen its footprint.
WELL Health is also optimizing its expenses and operational efficiency, which could boost its profitability. Given its healthy growth prospects, improving profitability, and discounted stock price, I am bullish on WELL Health.
Lightspeed Commerce
Another stock that has been under pressure over the last few months is Lightspeed Commerce (TSX:LSPD), which has lost 32.8% of its stock value compared to its 52-week high. Its cautious outlook and uncertain macro environment have dragged its stock price down. Amid the pullback, the company’s valuation looks attractive, with its price-to-book multiple at 0.9.
Meanwhile, Lightspeed’s customer base and ARPU (average revenue per user) are expanding thanks to its new releases and geographical expansion. Besides, its Unified Payments initiative has resonated well with customers, as GPV (gross payment volume) as a percentage of GTV (gross transaction value) increased to 29%. Further, Lightspeed’s management expects GPV as a percentage of GTV to rise to 30 to 35% by the end of fiscal 2024. The company could also benefit from the shift in its customer base towards higher GTV Customer Locations. So, its outlook looks healthy.
Considering all these factors, I believe Lightspeed would be an excellent long-term bet.
Telus
The telecom sector has been under pressure over the last few months due to rising interest rates and regulatory headwinds. In November, the CTRC (Canadian Radio-television and Telecommunications Commission) mandated large telecom players share their fibre network with independent competitors within six months. This decision would disincentivize companies, such as Telus (TSX:T) and BCE, which have invested substantially in expanding their broadband infrastructure. Amid the weakness, Telus has given up around 23% of its stock value compared to its 52-week high.
However, Telus continues to expand its customer base, adding 404,000 new customers in the December-ending quarter. Besides, its long-term growth prospects look healthy as the demand for telecommunication services continues to rise in this digitally connected world. Further, its other growth segments, Telus Health, TELUS International, and TELUS Agriculture & Consumer Goods, could continue to drive its financials in the coming quarters. Also, its valuation looks cheap, with its NTM price-to-sales and NTM price-to-earnings multiple at 21.6 and 1.6, respectively. What’s more, it offers a healthy dividend yield of 6.75%, making it a worthy buy.
