In the world of investing, legendary billionaire Warren Buffett’s famous mantra “Be greedy when others are fearful” serves as a timeless reminder that opportunities often arise when others shy away. As we find ourselves in the midst of a robust bull market, marked by the recent record-breaking performance of the S&P 500, it’s a prudent time to explore potential investments in underappreciated stocks poised for growth. Today, we highlight two compelling options in the healthcare sector: Teladoc Health and Pfizer.
Teladoc Health – A Telemedicine Pioneer
Teladoc Health, a prominent telemedicine provider, has faced challenges over the past couple of years. Two key factors contributing to its subdued performance are:
- Post-Pandemic Slowdown: Teladoc witnessed an exceptional surge in both revenue and patient visits during the early days of the COVID-19 pandemic. However, these figures have cooled down since then. Despite this, the company continues to be a significant player in the telemedicine industry.
- Profitability Concerns: Teladoc has yet to turn a profit, which has disappointed some investors. However, there’s optimism for the company’s future success, primarily due to the growing acceptance of telemedicine. Customer satisfaction remains high, with more than 90% of those surveyed expressing contentment with the service.
Teladoc Health’s potential lies in its expanding ecosystem, boasting 90.2 million integrated care members as of the third quarter of 2022, a 10% YoY increase. This growth, coupled with the development of services like its chronic care unit and BetterHelp therapy, suggests the company may be building a network effect. Currently, Teladoc’s forward price-to-sales ratio stands at 1.2, making it an attractive choice for investors willing to hold onto the stock. While a rapid recovery is not guaranteed, Teladoc’s future appears bright.
Pfizer – A Pharma Giant with Upside
Pfizer, the pharmaceutical powerhouse, achieved remarkable success with its coronavirus vaccines (Comirnaty) and medicines (Paxlovid), becoming the first company to exceed $100 billion in annual sales. However, the decline in revenue from its COVID-19 portfolio impacted its stock performance negatively.
There is renewed hope for Pfizer’s investors:
- Diverse Product Pipeline: In the past year, Pfizer secured an impressive seven regulatory approvals, more than double the industry average. These new products are expected to mitigate the revenue gap left by the decline in Paxlovid and Comirnaty sales.
- Strategic Acquisitions: Pfizer’s acquisition of cancer specialist Seagen for $43 billion underscores its commitment to innovation. With 83 programs in its pipeline, including 23 in phase 3 studies and four in the registration stage, Pfizer is positioned for a robust recovery in both revenue and earnings.
Additionally, Pfizer offers investors a forward price-to-earnings ratio of 12.2, below the industry average of 17, making it an appealing investment opportunity. With a generous dividend yield of 5.9% and a history of consistent payout increases, Pfizer stands out as a reliable blue-chip stock for long-term investors.
Seizing Opportunities in the Bull Market
As the bull market charges ahead, it’s essential for investors to consider opportunities in undervalued stocks with growth potential. Teladoc Health and Pfizer, while facing their respective challenges, exhibit promising qualities that make them worth a closer look.
Teladoc’s expansion in the telemedicine space and Pfizer’s robust product pipeline, strategic acquisitions, and attractive dividend program position them well for future success. While no investment is without risks, these two healthcare industry leaders present compelling cases for those seeking to capitalize on the current market conditions.
