Telehealth specialist Teladoc Health (NYSE: TDOC) posted its third-quarter results recently, and its shares lost value, reflecting unimpressed investors. But there’s a lot to like about Teladoc, and with its shares recently down more than 50% from their 52-week high, it’s looking attractive for long-term investors.
Teladoc’s key business metrics are trending up. The company exceeded revenue and earnings expectations in its last quarter, with revenue up 81% year over year and total visits growing by 37% year over year to nearly 3.9 million.
In addition, Teladoc has a big new contract with Health Care Service Corp., or HCSC, the fifth-largest U.S. health insurer, which will offer Teladoc’s chronic-care solutions for diabetes and hypertension to its commercial fully insured members in multiple markets.
Finally, Teladoc’s Primary360 service identifies and treats previously undiagnosed chronic diseases and connects members with virtual specialty-care services, including mental health support; Primary360 is already attracting major partnerships, such as with CVS Health and Centene.
The pandemic has helped telehealth take hold, with many Americans seeing their doctors virtually. That bodes well for Teladoc’s future. Investors should consider it for their long-term portfolios. (The Motley Fool owns shares of and has recommended Teladoc Health.)
Ask the Fool
Q: What’s the difference between intrinsic value and market value? – P.T., Salisbury, Maryland
A: Imagine MacDonald Farms Inc. (ticker: EIEIO). Its intrinsic value is what it’s really worth, based on factors such as its assets and debt, profit margins, growth prospects and, ultimately, the earnings it’s expected to generate over its lifetime. Having that value may sound great, but it’s largely based on estimates and assumptions about the future, so even smart stock analysts will arrive at different numbers. Intrinsic value can change over time if the company’s fortunes change for the better or worse.
Market value, also known as market capitalization (or “market cap”), is easy to determine: It’s what investors are willing to pay for a company, as reflected by its stock price. If MacDonald Farms has 200 million shares outstanding and the current share price is $30, then its market value is $6 billion (multiply 200 million shares times $30 per share).
When a high-quality company’s estimated intrinsic value is significantly higher than its current market value, then its stock is likely undervalued and worth considering for your portfolio.
Q: When we spend money, the economy benefits. But do we hurt the economy by saving? – O.H., Pleasanton, California
A: It’s true that spending is good for the economy, helping businesses grow and prosper; indeed, consumer spending is responsible for the lion’s share of a country’s gross domestic product, or GDP. But the economy can also benefit when lots of people save more, because more money in banks means more money is available to be lent out to consumers and businesses. And most of us need to be saving and investing effectively for retirement.
My dumbest investment
My dumbest investment decision was when Apple’s stock price was very low. There was talk of it going under, and Microsoft made news in buying Apple shares. I think it was to shore up Apple so that there would still be competition and Microsoft wouldn’t be seen as a monopoly. I figured putting $1,000 into Apple wouldn’t be a bad investment. In short order, the stock doubled, and I thought there wasn’t much upside left, so I sold it. – R.S., online
The Fool responds: Well, at least you doubled your money – though it’s true that had you held on, you might have increased it far more.
It’s easy to regret this move deeply, but remember that at the time, it wasn’t clear that Apple would go on to introduce multiple hugely successful products (think iPod, iPhone, iPad, Apple Watch and more) – and to achieve an enormous market value (recently near $2.5 trillion). If, after you doubled your money, your research into the company suggested that it wasn’t going to grow briskly, selling would have been reasonable – especially if you moved that money into a stock you believed in more.
Microsoft’s investment was a win-win, as both companies settled ongoing litigation and agreed to cross-license their software. Steve Jobs reportedly said about this investment from his company’s rival: “We have to let go of this notion that for Apple to win, Microsoft has to lose.”
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