Investors frequently dream of buying the next Apple or Tesla early and earning outsized returns. Finding such stocks at their earliest stages is difficult, but not impossible -- some up-and-coming stocks do show signs of great success relatively early. One of these is Teladoc Health (NYSE:TDOC).

Yes, Teladoc has risen well off its 2016 lows in the $9-per-share range. However, COVID-19 shined the light on its telehealth services as patients needed a way to visit a doctor without going to an office crowded with other sick patients.

The stock has already risen by more than 160% year to date. And telehealth isn't just a pandemic thing; it's here to stay. According to Fortune Business Insights, the global telehealth market will grow to an estimated value of $266.8 billion by 2026. This represents a compound annual growth rate (CAGR) of 23.4%.

Thanks to its presence in both U.S. and international markets, Teladoc has positioned itself to benefit from this growth. As patients turn to this low-cost, convenient solution in increasing numbers, the long-term future for this healthcare stock appears bright.

TDOC Chart

TDOC data by YCharts

Teladoc's expansion

At first glance, Teladoc may look like a glorified call center staffed by doctors. Admittedly, Teladoc has a narrow competitive moat in the sense that any doctor's office or health company can set up a competing service.

Still, Teladoc has managed to widen that moat through acquisitions that bring increased capabilities. Its purchase of Best Doctors expanded its ability to diagnose patients and understand their medication history. It also bought Advance Medical and MédecinDirect to offer service outside the U.S., and international business accounted for just less than 13% of revenue in the second quarter of 2020.

This summer, Teladoc made plans for its biggest purchase yet as it announced an agreement to buy Livongo Health for $18.5 billion. Livongo helps patients by aggregating health data so they can make better decisions about managing chronic conditions such as diabetes and hypertension.

Combining this capability with Teladoc's telehealth services should help providers make more informed decisions about patient care. Both companies expect the merger to close by the end of 2020.

Sick woman with mask talking to a doctor on her tablet.

Image source: Getty Images.

Teladoc's financials

Although Teladoc received relatively little attention before the pandemic, it was already registering massive revenue growth. Revenue increased by 32% in 2019, and over the past five years its CAGR came in at 64%. But COVID-19 fueled second-quarter revenue to a rise of 85% year over year, with total visits up by 203% over the same period.

Teladoc only improved its profit picture slightly, with a loss of $0.34 per diluted share, compared with a loss of $0.41 in the same quarter last year. This probably would have been higher if not for a $0.10-per-share charge from eliminating a portion of its previously outstanding debt.

Investors do need to remember that profitability will probably not come soon. No analyst forecasts a profit until at least 2022, and the last report represented an earnings miss of $0.11 per share.

Moreover, at more than 22 times sales, Teladoc is not a cheap stock. However, once the merger is complete, it will incorporate Livongo's sales into its revenue figure. At that point, this ratio should fall.

The future of Teladoc

Admittedly, the near-term picture for Teladoc is uncertain, because it will likely hinge on the number of coronavirus infections. If the number of new cases falls consistently, Teladoc could see a short-term pullback. However, if infections rise as the weather turns colder, Teladoc will likely keep moving higher.

Still, investors should remember that the company logged considerable revenue growth even before the pandemic. Moreover, the long-term growth potential is higher outside the U.S. The company has only scratched the surface of what it can offer overseas, and the portion of revenue from international sales will probably rise over time as it has with other growth companies.

As more patients seek telehealth services, Teladoc's prospects and its stock price should both rise dramatically.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.