You can be too late to the party with some stocks. Sometimes investors buy a stock after it's delivered massive returns only to find that the sizzle fizzles.

Does Teladoc Health (TDOC -1.32%) belong in that category? The virtual health services provider's shares have more than quintupled in value over the past three years. Teladoc stock is up 65% over the past 12 months. Some might think that the train has left the station on this high-flying stock. But I don't think that's the case. Here are three reasons it's not too late to buy Teladoc Health.

Hands holding a cell phone showing a young male doctor wearing a white coat with a stethoscope around his neck

Image source: Getty Images.

1. Big growth opportunity without adding a single new client

Teladoc Health's primary uses a business-to-business model. Clients, including employers and health plans, sign up with Teladoc so that their employees and members can access the company's telehealth services. This business model has worked really well. Teladoc claims 40% of the Fortune 500 and over 50 of the biggest U.S. health plans as clients.

This impressive client base also translates into an equally impressive number of members who have access to Teladoc's services -- around 54 million people in the U.S. at last count. But what's even more intriguing is that Teladoc Health could grow its U.S. member base by nearly 140% without adding a single new client.

The company estimates that there are 75 million potential members within its existing clients that don't yet have access to its virtual care services. There aren't many companies that have this kind of growth potential with current clients. Of course, Teladoc also has a huge market outside its existing client base that it's aggressively pursuing as well.

2. Expansion into other areas of telehealth

Telehealth encompasses a lot of niche areas. Teladoc Health already offers services in many of those niches, but it also has opportunities to grow by expanding into additional areas. The company's pending acquisition of InTouch Health is a great example of how Teladoc is taking this path to growth. 

InTouch Health focuses on provider-to-provider telehealth. Thirty of the 50 largest U.S. health systems use InTouch's platform. Teladoc's planned acquisition of InTouch will even further establish the company as the dominating leader in telehealth.

Expansion into other areas of telehealth doesn't always require acquisitions, though. For example, in December 2019 Teladoc introduced its new Teladoc Nutrition services, which offers personalized nutrition counseling along with access to a registered dietitian. If there's a healthcare need that can be met remotely, look for Teladoc Health to address that need sooner or later.

3. Demographic trends

Clients like Teladoc Health because its virtual services save them money. Members like Teladoc Health because it's a lot more convenient than physically going to visit a healthcare professional. Demographic trends should only increase Teladoc's appeal in the future.

The number of Americans 65 and over is expected to nearly double within the next four decades. Employers, health plans, and government healthcare programs will look for any viable alternative to control the rising healthcare costs associated with this demographic trend.

This trend isn't just affecting the U.S., though. Countries around the world are experiencing rapid growth in the numbers of senior citizens. As the largest global telehealth provider serving patients in more than 130 countries, Teladoc Health is in a great position to benefit from this long-term trend.

Potential problems

What about the risks associated with investing in Teladoc Health? The three biggest potential problems are possible competition, Teladoc's lack of profitability, and its sky-high valuation.

Competition is always a threat to any company. However, my view is that Teladoc Health's dominance in the telehealth market gives it a strong competitive advantage that would be difficult for even a rival with deep pockets to overcome.

Teladoc isn't profitable yet. The company could have to raise more cash in the future, most likely through a public stock offering or by issuing convertible notes. Either option ultimately means dilution in the value of existing shares. However, this isn't a near-term worry. And Teladoc's improving adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is an encouraging sign that it has a path to profitability.

Growth stocks like Teladoc come with premium valuations. But those valuations usually are only a significant problem if the growth tapers off dramatically. Investors are expecting that Teladoc will deliver long-term organic growth of between 20% and 30% annually. With the growth opportunities mentioned earlier, I don't think achieving this growth rate will be a problem. Despite the risks, it's still not too late to buy Teladoc Health.