The Canadian stock market is hitting new all-time highs, one day after the next. The performance of the S&P/TSX Composite Index reflects the broader Canadian stock market. As of this writing, the index is up by a massive 26.4% from its 52-week low, and hovering around new all-time highs.
Despite the bull run in the stock market, there is no doubt that uncertainty exists. Times like these can make it difficult to make the right picks when investing in the stock market. Fortunately, the TSX has plenty of defensive stocks that offer plenty of growth potential you can leverage for wealth growth.
WELL Health Technologies Corp. (TSX: WELL) is a Canadian healthcare stock that comes to mind when I think of defensive growth plays in the stock market. I’ll discuss why I feel it can be an excellent investment to consider.
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WELL Health Technologies
WELL Health Technologies is a $1.2 billion market capitalization company that owns and operates one of North America’s largest portfolios of primary health clinics. It offers healthcare-related services through several segments in the region. The company offers a wide range of services and products that empower healthcare providers to improve positive patient outcomes. However, a superficial look at its chart might suggest it’s not a growth stock at all.
It’s easy to understand why someone might assume such by simply considering the graph. However, it is important to consider the fact that the company is still relatively new. WELL is a growth stock in its nascent stage, meaning there will be plenty of volatility and uncertainty in its near future.
An oddity in a defensive industry
The healthcare sector is considered a defensive industry due to the essential nature of the services this segment of the economy provides. However, defensive doesn’t necessarily mean boring. WELL Health has reported 1700% growth in its revenue between 2020 and 2024. Despite massive revenue growth in just a few years, its latest quarter still saw it report operational losses.
In spite of operating losses, the company’s cash flows are increasing and setting things up for much better performance in the future. WELL Health has grown from being a simpler telehealth company into a proper healthcare tech company. Its tech, services, and support functions are helping healthcare practitioners modernize their practices and improve what they do.
The demand for its services is booming and expected to grow for the foreseeable future. Driving growth to meet growing demands means facing the growth pains that come with it. WELL Health has struggled to maintain positive earnings, reporting a $41.9 million net loss in its latest quarter. However, the loss was attributed to one-time issues.
Barring the one-time losses, the company’s net income actually grew by $2.6 million compared to the same quarter last year.
Foolish takeaway
WELL Health is planning strategic divestitures from its US-based WISP and Circle Medical businesses. Selling those will get the company the kind of proceeds it needs for more focused growth in Canada. As of right now, WELL Health’s network comprises only 1% of the Canadian market for healthcare clinics. This means there is plenty of growth to accomplish.
Investing in the healthcare sector is as defensive as you can get with your self-directed investment portfolio. With growing spending on healthcare tech, it can also be an excellent area to allocate money for substantial long-term gains.
