Global equity markets, including the Canadian market, have rebounded from their April lows amid easing geopolitical tensions and expectations of a resolution to the ongoing trade war. The S&P/TSX Composite Index is up 22.2% from its April lows. However, the following two stocks have failed to participate in this recovery rally. Given their growth prospects and discounted stock prices, I believe these stocks offer excellent buying opportunities for long-term investors.
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WELL Health Technologies
WELL Health Technologies (TSX: WELL) offers a range of products and services to empower healthcare practitioners to deliver positive patient outcomes. The tech-enabled healthcare company has been under pressure this year, with a decline of approximately 29.5% in its stock value. The announcement of an investigation into the billing practices of WELL Health’s U.S. subsidiary, Circle Medical, and the decline in its first-quarter adjusted net income have contributed to a steep decline in WELL’s stock value.
However, the increased adoption of telehealthcare services and the digitization of clinical procedures have created long-term growth potential for WELL Health. Meanwhile, the company continues to expand its business both organically and through strategic acquisitions. Earlier this month, the healthtech acquired two assets that can contribute $12 million to its annualized revenue and $3 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
Additionally, management noted that it has a solid acquisition pipeline comprising 124 clinics, which represent $370 million in annualized revenue and $50 million in adjusted EBITDA. Amid these growth initiatives, the company has raised its 2025 guidance for its Canadian Patient Services segment. The new guidance represents a 16.2% increase in revenue and a 6.6% increase in adjusted EBITDA. Furthermore, amid the steep pullback, WELL Health trades at an attractive NTM (next 12 months) price-to-sales and NTM price-to-earnings multiples of 0.8 and 11, respectively. Considering all these factors, I am bullish on WELL Health.
Docebo
Another Canadian stock under pressure this year is Docebo (TSX: DCBO), a company that has developed a highly customizable learning platform for businesses. It currently trades 46% lower than its 52-week high. Rising competition and the expectation of growth slowing down have made investors skeptical, while weighing on its stock price.
However, the Toronto-based learning management solutions (LMS) provider posted a healthy first-quarter performance in May, with its revenue and adjusted EPS (earnings per share) growing by 11% and 16.7%, respectively. It also generated $9 million of free cash flow, representing 15.7% of its total revenue. With cash and cash equivalents of $91.9 million at the end of the first quarter, the company is well-positioned to support its growth initiatives.
Moreover, the LMS market has solid growth potential due to its scalability, cost-effectiveness, technological advancements, and growing adoption of remote working and learning. The company is also investing in artificial intelligence (AI) to enhance its product capabilities and improve operating efficiencies. Further, its expanding customer base, growing average revenue per user, and multi-year customer contracts provide stability to financials. Amid these growth initiatives, management anticipates its topline to grow by 9–10% this year, and its adjusted EBITDA margin to come between 17% and 18%. Additionally, its NTM price-to-earnings multiple also stands at a reasonable 24.7, making it an attractive investment opportunity.
