Digital disruption has been a key by-product of the global pandemic. There’s a new look to several industries, including the healthcare sector, which has evolved immensely during the pandemic. The pandemic has changed consumer preferences towards healthcare, which is why digital health stocks have been on fire of late.
Some of the most lucrative stocks to buy include telemedicine stocks which could offer multi-bagger returns down the road.
The government has also been relaxing rules that complicated telehealth companies’ proceedings in their expansion. Additionally, several states have ironed out the path for doctors in practicing across state lines without the need for additional licenses.
Telehealth companies have been incredibly efficient in connecting patients to health systems, physicians, and insurers. The market is expected to grow at a breathtaking pace in the next few years. According to Fortune Business Insights, the telehealth sector is set to grow from $90.7 billion in 2021 to $636.4 billion by 2028, at a whopping 32.1% rate.
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With that being said, let’s look at three of the most attractive opportunities in digital health. The chart below shows their 12-month price performance, along with that of the 40-stock-portfolio Global X Telemedicine & Digital Health ETF (NASDAQ:EDOC) for comparison.
- Medtronic (NYSE:MDT)
- Butterfly Network (NYSE:BFLY)
- Teladoc Health (NYSE:TDOC)
Click to EnlargeSource: Koyfin
Digital Health Stocks to Buy: Medtronic (MDT)
Source: JHVEPhoto / Shutterstock.com
Medtronic is currently the largest medical device maker globally. It boasts an extensive product portfolio with an incredible pipeline. Revenue growth and margins have been spectacular over the past year and are likely to expand over the next few years.
Moreover, the MDT stock dividend profile is exceptional, having grown its payouts for 44 years.
Medtronic has been growing its business quickly through partnerships and introducing new products to the market. In 2020, it had close to 200 approvals and approximately the same number in 2021. It has launched into multiple new segments, including diabetes, cardiovascular, neurosciences, and others.
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Moreover, with an R&D budget of over $2.7 billion in 2022, it expects to launch a healthy number of products this year. With a profitability profile firmly in the green over the past several years, the business continues to turn heads with its performance.
Butterfly Network (BFLY)
Source: Shutterstock / PopTika
Butterfly Network offers a ground-breaking ultrasound technology that could potentially cater to a massive underserved population globally. Its IQ device is a simple imaging tool to diagnose multiple medical issues.
Additionally, medical imaging is non-existent in most parts of the world; the Butterfly’s pocket AI device can provide a robust tool for global health professionals.
The company forecasts a colossal market of 40 million practitioners, currently targeting just 6 million. It forecasts a huge market opportunity of approximately 100 million scans in just the United States. The system is highly effective for use in both the developed and developing markets due to the flexibility offered by the IQ tool.
Butterfly has been steadily building its revenue base and forecasts a 34% to 35% increase in 2021 revenues to $61.5 million to $62.5 million from the prior-year period. Investors need to be patient with BFLY stock, as it can potentially offer tremendous returns in the foreseeable future.
Digital Health Stocks to Buy: Teladoc Health (TDOC)
Source: Postmodern Studio / Shutterstock.com
Teladoc benefitted immensely due to the pandemic-led tailwinds in the medical sector. However, its business has the legs to continue performing exceptionally well even in the post-pandemic world.
This is apparent in its most recent results, where its revenues soared over 81% from the prior-year period. Year-over-year revenues are at a top-notch 115%.
Teledoc acquired Livongo a couple of years ago, a specialist in managing various conditions such as diabetes. Moreover, it will enable the company to serve the needs of a wide variety of patients, especially those suffering from chronic conditions. During the third quarter, the company’s chronic care members jumped 24%.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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