Major indexes such as the S&P 500 have seen gains recently, but with the potential for a second wave of COVID-19 on the horizon, investors may worry that they're seeing a bear-market rally. Indeed, there has never been a pandemic in recorded history that did not have a second wave. Should COVID-19 stage a revival in fall or winter, we will possibly see the S&P dip back below 2,300, as we witnessed in March.

In such a scenario, investors will want to buy stocks that can either survive the downturn or rally sharply as they provide essential services to combat the COVID-19 pandemic. Today, let's take a look at two stocks, Zoom Video Communications (NASDAQ:ZM), and Teladoc Health (NYSE:TDOC), and their potential to rally sharply in another bear market.

A patient talks to a doctor on a computer tablet.

Image source: Getty Images.

The case for Zoom

During the first wave of the COVID-19 pandemic, Zoom saw the number of participants using its meeting software reach a peak of 300 million per day in April, an exponential level of growth from just 10 million in December. Simultaneously, the number of total meeting minutes is projected to surpass 2 trillion this year, compared with just 100 billion in 2019.

Of course, the newfound success has caused Zoom meetings to become targets for cybercriminals and hackers. Privacy issues aside, however, the company's problems mostly come from its efforts to monetize its subscribers. Even though its total meeting minutes and subscriber count increased by thousands of percentage points, the company's revenue increased by just 169% in the first quarter of 2020, to $328 million.

And it wasn't just the need to work at home thanks to lockdowns and quarantines that led new customers to flood to Zoom en masse. During the quarter, the company's sales and marketing expenses nearly doubled, to $121 million. This shows that Zoom's business relies on both massive call volume and heavy spending on advertising to acquire customers, which is a severe risk factor when it comes to in its stock.

Why Teladoc is a better buy

In the first three months of 2020, the number of online consultations with physicians on Teladoc's platform totaled 2 million, double the number in the same period last year. There was growth in demand across all kinds of people using Teledoc's consultation services, with the sharpest increase seen in young adults and patients with mental illness.

At the same time, Teladoc's Q1 2020 revenue was up 41% from last year, to $180.8 million. Unlike Zoom, Teladoc achieved this result while spending just $18 million in sales and marketing expenses. Meanwhile, the company is projecting its revenue for the entire year will amount to between $800 million and $825 million, representing nearly 100% growth compared with 2019.

Indeed, Teladoc's customer base grew by 61%, to 43 million paid members. Of those members, the number seeking physician consultations was 13.4%, representing a 230-basis-point improvement since last year.

Teladoc's services are also surprisingly affordable, with many consultations costing just $49. Meanwhile, it can incentivize healthcare professionals to provide services under its brand, as the company now has 50,000 registered physicians. Physicians' pay can range from $20 to $40 per consultation (with no overhead costs, unlike clinics), and each session lasts fewer than 10 minutes.

The company is also on track to achieve profitability, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) surging to $10.7 million, compared with $1.2 million last year. Against Zoom's price-to-sales ratio of 85, Teladoc is a good buy at 23 times sales. Overall, I think Teladoc is a much better stock to buy for investors interested in companies offering growth at a reasonable price and that can thrive during a second wave of the COVID-19 pandemic.