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Growth stocks offer investors the potential to make life-changing returns. While they usually carry higher risk than the safer, more established stocks, including them in a well-diversified portfolio is essential.
In this article, I will discuss Well Health Technologies Corp. (TSX:WELL), one of the best growth stocks to buy today.
Digitizing the healthcare industry
Well Health is bringing technology to the healthcare industry.
I think we have all had slow, inefficient, and painstaking experiences with healthcare. Whether it’s long wait times at our appointments, or difficulties connecting with healthcare practitioners, Well Health aims to solve these problems.
And it is, in fact, doing so. Shorter wait times, improved access to physicians, and access to results are all improving the patient experience as well as patient outcomes. But it doesn’t end there. The benefits are clear for the physicians too, as they are able to focus more on care, rather than get bogged down by administrative tasks and running the business. This is leading to less burnout, greater efficiencies, and more empowered patients. It’s clearly a win-win scenario.
Well Health is profiting from strong growth
We can clearly understand why healthcare providers are seeking out Well Health’s digital solutions. And this is evident in Well Health’s results.
In its latest quarter (Q3 2024), Well Health reported its 23rd consecutive quarter of record-breaking results. Revenue increased 27% to $251.7 million. Also, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 16% to $32.7 million.
Furthermore, the company is achieving really strong returns. For example, Well Health’s return on invested capital (ROIC) for all clinics acquired in 2022, 2023, and 2024 was 41%, 24%, and 28% respectively. Also, the company’s margins are increasing at a solid rate.
So, we can see that Well Health stock offers not only strong growth but also strong and increasing returns. And Well Health’s stock price has been increasingly reflecting this positive and exciting reality. As you can see from the graph below, Well Health’s stock price has increased 62% in the last year and over 200% in the last five years.
Here’s why I think the momentum in this growth stock’s price will continue and why I think it’s one of the best stocks to buy now.
The market remains untapped
The primary care market in Canada remains a very large and pretty much untapped market. In fact, of the $40 billion of physician spending, Well Health has roughly $400 million. This means that there is still plenty of opportunity for growth.
Currently, the company’s mergers and acquisition (M&A) pipeline stands at 165 clinics. These clinics generate more than $440 million of annual revenue at double digit margins. Also, the company’s pipeline of signed acquisitions stands at 19 clinics, which represents $50 million in revenue at double digit margins.
The three-year average ROIC of Well Health’s acquisitions is 30%. Clearly, the company is generating strong returns and value-added for both physicians and its shareholders.
The bottom line
In summary, Well Health’s growth has only just begun, which makes it a top stock to buy. With its history of strong execution and operational excellence, the company has shown that it can deliver. All of this is captured in Well Health’s earnings estimates.
For 2024, analysts are expecting earnings per share (EPS) of $0.20, and by 2027, they’re expecting EPS of $0.31. This compares to break-even earnings in 2023 and 2022 and losses in the prior years.