3 Telemedicine Stocks You Never Heard of but Should Buy Now

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Know the best telemedicine stocks on the watch and why you should invest in them now.

Hey Bow Tie Nation, Joseph Hogue with the Let’s Talk Money channel and a few stock picks for one of the most interesting post-pandemic trends I’m watching.

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According to the RAND Corporation, just 4% of the U.S. population accessed telehealth before the pandemic with restrictions to telemedicine delivery making it a non-starter. Because insurers would only reimburse telemedicine visits under special circumstances, the healthcare industry just never adopted the change in technology.

That red-tape and lack of change in healthcare is a big reason why Americans pay 145% more for healthcare than the average in developed countries. We in the red, white and blue are paying an average of $10,000 a year for healthcare versus just $4,000 in other OECD countries.

The Rise of Telemedicine Delivery

But with social distancing and lockdowns, the industry was forced to relax restrictions on telemedicine delivery and access boomed! A recent study published on the network run by the American Medical Association found telehealth services grew by as much as 4,000% last year with doctors at UCLA alone doing 2,700 telemedicine visits a day. The technology was able to replace up to 40% of office visits and took access to healthcare to everyone.

Even as life gets back to some kind of ‘normal’ the benefits of telemedicine have become apparent. Management at the UCLA Health network expects 20% of their volume to continue to be virtual through telehealth visits.

And this all goes way beyond just virtual doctor visits. There is a revolution happening in healthcare from data analytics to IT services and software. Using technology better is saving time, money and more importantly bringing access to a large portion of the population that was underserved before.

It’s that trend I saw when recommending Phreesia Inc last year at $24 a share. The company is a leader in medical payment solutions with an addressable market over $7 billion and a huge advantage in the software-as-a-service model. That trend took shares of Phreesia to $79 each and even after the selloff in growth stocks, the stock is 102% higher over the year.

How to Find the Best Telemedicine Stocks to Invest to Ride the Trend

In this video, I’ll show you how to find telemedicine stocks and how to narrow your list to the best in the group. Then I’ll reveal three telehealth stocks to watch for that revolutionary trend in medical care.

To start our list of telemedicine stocks to research, we’ll head on over to Stockcard.io and look in the featured collections section. These are groups of stocks in some of the biggest trends and a great place to start.

We’ve got a telemedicine list so I’ll click through there and we see there are 60 stocks in the theme. Now I’m going to click off this OTC toggle so we only see stocks traded on the major exchanges but we’ll keep penny stocks on.

I’ll show you how to narrow your list later but you can also add some filters here to screen your stocks. I can select stocks by market cap, so the size of the company, I can filter for good sales growth here and a lot of other fundamentals to start my research. Here we’ve narrowed the list to 25 companies to research further in that telehealth trend.

I’ll leave a link to Stockcard below. Don’t forget to click through and follow the 2021 Bow Tie Nation portfolio, up 37% already and beating the market by 26% this year.

As a special bonus, I’ve negotiated an exclusive discount for everyone in the community. Use the promo code bowtienation for an exclusive discount beyond the free trial.

3 Telemedicine Stocks to Buy for the Medical Care Revolution

Our first telemedicine stock in the list is Tabula Rasa Healthcare, ticker TRHC, a billion-dollar analytics platform for pharmaceuticals.

Tabula Rasa uses a unique data analytics platform to optimize drug regimens and reduce medication risk. Instead of the one-to-one interaction software, its Medwise platform analyzes side effects across all drugs in a patient’s plan.

And that’s important because as more medications get added to a patient’s plan, we see a huge increase in adverse drug events along with 1.3 million ER visits a year and over $35 billion in medical costs.

The platform is already being used in more than 350 health plans and by 15,000 community pharmacies with one study showing a 43% reduction in drug-related hospitalizations and an ROI as high as 13-to-1 for clients.

Sales grew at a 20% annualized pace over the decade through 2019 and are expected to reach $344 million this year. Growth is expected to slow a little to around 15% but the price is good on this one at just 3.2-times sales and the average analyst target of $57 a share is 32% higher than the current price.

Sign up on Stockcard for free and make stock-picking easy with the research tool I use! Use promo code: bowtienation for an exclusive discount!

We’ve still got two more telemedicine stocks to highlight but I want to show you how I narrowed the list and how to look for stocks to put on your radar.

First here, I looked to the income statement for each company for total sales and sales growth over the last few years. Now it’s important here that you’re looking at sales growth beyond just last year. All the companies in the telehealth space booked amazing growth last year but you want to find companies that were able to do it before the pandemic as well as those that can continue to grow revenue.

From there, I also looked at the price-to-sales valuation for each stock to get an idea of how expensive shares are versus peers. So here you take the market cap of the company, that’s the total value of the shares issued, and divide that by either last year’s sales or expectations for this year.

Now understand, there’s a big difference in the price multiples across the group. For example, those in the software-as-a-service segment are being priced as growth stocks and you’ll see price multiples of 10 to 15 times sales. By comparison, there are other segments where a price of maybe three-times sales is the average.

That doesn’t mean the cheaper stocks are always going to be the best returns. It just means you need to compare price multiples for similar companies. You also need to look at other fundamentals like sales growth and profit margins to get a sense of which stocks are valued correctly and which to buy.

Finally here, I looked through recent investor presentations and other research to find those companies with a competitive advantage or an innovative idea. It’s a little more subjective and takes more digging versus just comparing the price fundamentals but this is really where you get to understand a company and find the best of the group.

Next here is OptimizeRx Corp, ticker OPRX, another medical technology company in the pharmaceuticals space.

OptimizeRx is the nation’s largest point-of-care communication platform with features in symptom diagnosis, treatment selection, prescriptions and patient support. Basically, the platform helps doctors prescribe the right medications and makes sure patients are taking them…which is kind of a gold mine for the pharmaceutical clients of the company.

Revenue has grown at a 52% annualized pace over the last decade with $58 million expected this year and $78 million in 2022. That makes it the most expensive on our list at 14.6-times on a price-to-sales basis but inline with peers and the addressable market here is huge. Over $20 billion is spent by pharmaceutical makers in annual marketing to providers with just $4 billion of that digital. OptimizeRx has a strong platform that can take market share in the existing $4 billion and expand it out into the other $16 billion as well.

Analysts have an average price target of $50 a share here which is close to the current price but I think this one can surprise higher as it builds back to the $62 peak and beyond.

Change Healthcare, ticker CHNG, is by far the largest telemedicine stock on our list at a $7.3 billion market cap.

The company is really an end-to-end technology-driven solutions provider in software and analytics, network solutions and communications reaching over 6,000 hospitals and a million physicians. The platform touches everything from payment services, risk management and revenue cycle management and serves payers as well as providers.

Sales are expected 19% higher this year to $3.4 billion, so a little slower sales growth obviously on that huge base but the shares also only trade at a 2.1-times price multiple, so the least expensive in our list.

What I really like about the company though, and I don’t think is priced into the shares is some of the innovation it’s building into the platform. It’s using artificial intelligence to drive telemedicine imagining. The company is also rolling out its integrated eCommerce solution to reach the patient side of the market and an opportunity I think could be even larger than its core business.

There’s a lot here between the company’s data analytics and health information program that can make this a growth stock and drive that valuation higher.

These stocks are what every investor needs to indulge in as early as now before these companies climb to becoming global leaders in the healthcare sector. Their prices now may be somewhat high valued since last year's massive growth in the healthcare industry since the pandemic started, but they will largely be highly profitable in ten years time when the shares are 10X higher.

Sign up on Stockcard for free and make stock-picking easy with the research tool I use! Use promo code: bowtienation for an exclusive discount!

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