Given the market volatility over the past few years, some investors are questioning whether they should still be putting their hard-earned money into the stock market. There is substantial economic uncertainty at the moment, and we could see a recession this year. But long-term investors know that equity markets should continue to appreciate on the other side of whatever economic trouble is on the way short term.
For those investors with a long-term view and with $1,000 available that isn’t needed for monthly bills, paying off short-term debt, or firming up an emergency fund, there are some quality stocks available that can grow this initial sum for years to come. Let’s take a closer look at two excellent growth stocks to buy right now: Teladoc Health (NYSE: TDOC) and DexCom (NASDAQ: DXCM).
1. Teladoc Health
Last year was a horror show for Teladoc. Share prices of the telemedicine specialist plunged due to slowing revenue growth and deep net losses. In fairness, the red ink was due to non-cash impairment charges related to an acquisition, but investors didn’t seem to care. Although these issues are real, it’s important not to let them cloud the broader picture. Teladoc’s prospects largely hinge on the future of telehealth and its ability to execute its master plan.
Despite the headwinds, long-term investors can still be excited about the company’s prospects. Let’s first consider Teladoc’s execution. Revenue growth slowed, but the past three years were highly unusual. Teladoc’s business experienced an incredible pandemic boom that was unlikely to last forever. On the bottom line, Teladoc seems to have put the surprise impairment charges behind, at least based on its guidance for the fiscal year 2023.
The company expects a net loss per share between $1.70 and $1.25, compared to a loss per share of $84.60 last year. Further, Teladoc’s memberships and visits continue to move in the right direction. In the first quarter, total visits jumped by 8% year over year to 4.9 million. The company’s BetterHelp therapy service had 467,000 paying members as of the end of the quarter, 22% higher than the year-ago period. Teladoc is spending a lot of money on marketing and advertising to attract customers, which is necessary at this stage of its growth and is one of the main reasons it is unprofitable.
Once it becomes a more established corporation and cuts down these expenses, it will boost the bottom line, especially considering the company’s high gross margins, typically in the 60% to 70% range. And there are plenty of opportunities ahead for Teladoc to grow its business further. According to some estimates, the telemedicine industry will record an impressive compound annual growth rate of 24% through 2030.
Teladoc is one of the best stocks to cash in on this. Investors can acquire 41 shares of Teladoc at its current price of just under $24. Holding these shares for a while will pay rich dividends down the road.
DexCom is a continuous glucose monitoring (CGM) system specialist. CGM are devices that help diabetes patients keep track of their blood glucose levels throughout the day. The technology has gained traction among those with diabetes over the past decade or so. DexCom recently launched its newest device, the G7, in the U.S. and Europe. Note that the company ended 2022 with nearly 1.7 million customers globally. That sounds like a lot, but it is a mere tiny fraction of the 422 million diabetes patients worldwide.
Collectively, CGM companies — of which DexCom is one of the leaders — have likely captured only a small percentage of this vast market. Meanwhile, the evidence that CGM technology leads to better outcomes than blood glucose meters continues to mount. DexCom recently reported the results of a study conducted in the U.K. that shows that CGM leads to cost savings for the healthcare system and improved lives for diabetes patients.
Because of results like these, third-party payers will keep covering these devices, making them more accessible to the general public. The U.S. Centers for Medicare & Medicaid Services recently expanded those patients that will be covered under Medicare. The new coverage decision added non-insulin patients with a history of problematic hypoglycemia (or when blood sugar levels drop under a specific threshold).
Previously, only insulin patients were eligible for Medicare reimbursement for CGM machines. Given that they are associated with better outcomes, we can expect these devices to continue gaining in popularity among those with diabetes and third-party payers, which will greatly benefit DexCom over the long run. DexCom’s shares are changing hands for a little under $118 apiece right now, so investors can grab eight of them — with change to spare — with $1,000.
Those who do so today will be glad they did in 10 years.
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Prosper Junior Bakiny has positions in Teladoc Health. The Motley Fool has positions in and recommends Teladoc Health. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy.