2022 highlighted the importance of holding stocks for the long term. The stock market is subject to short-term ups and downs. However, savvy investors recognize this and do not abandon good growth stocks.
Resilient businesses can weather temporary storms while striving for better long-term growth. Here are two such companies that are on their way to success if investors are willing to wait for them to reach their full potential.
Teladoc: A dominant player in virtual healthcare
Virtual healthcare company Teladoc Health (TDOC -4.64%) experienced some exceptional gains during the worst of the pandemic. Through the lockdown, patients had no choice but to use telemedicine visits. When the pandemic subsided and hospitals reopened, investors expected telehealth services would no longer be in demand and dumped the company's stock, causing it to plummet.
Teladoc, on the other hand, is demonstrating that it can not only survive but thrive in the post-pandemic market. So far this year, the stock is up 12%. Teladoc's outstanding revenue and patient visit growth rate are currently driving up the stock. Operating revenue increased 11% year over year to $629 million in the company's recently reported first quarter. In Q1, both domestic and international revenue increased.
While investors are concerned that telehealth patient visits will decline now that hospitals and healthcare are fully operational, Teladoc's total visits increased by 8% in Q1 to 4.9 million. Total visits increased to 18.5 million in 2022, up from 10.6 million in 2020, the year when telehealth demand was at its peak. This indicates that demand exists and is growing as patients continue to reap the benefits of virtual healthcare.
Teladoc is not yet profitable, but it is making every effort to become so. Its net loss shrank to $69 million in Q1, compared to a massive $6.6 billion loss in the same quarter a year ago (which included a non-cash goodwill impairment charge).
The rising demand has led the company to predict another successful year. Management anticipates revenue in the range of $635 million to $660 million in the second quarter. Revenue for the entire year could range between $2.5 billion and $2.6 billion. Adjusted EBITDA could range from $285 million to $325 million.
According to various patient surveys, telehealth services allow patients to have a relaxing and stress-free medical consultation while saving them time, energy, and money. The global telehealth and telemedicine market is expected to be worth $285 billion by 2027, growing at a compound rate of 26%. Teladoc, which is already a major player in this industry, has the ability to thrive in the post-pandemic market.
Intuitive Surgical: A dominant player in robotic surgery
Medical equipment manufacturer Intuitive Surgical (ISRG -1.93%) has become hugely popular because of its near-monopoly in the robotic surgical market. Its da Vinci robotic system is used worldwide for minimally invasive surgery (MIS). This system enables surgeons to use tiny instruments with pinpoint precision while also providing 3D high-definition views of the operating field. MIS procedures also aid in the faster recovery of patients.
The company has only been in operation for 28 years, but it has grown its revenue and net profits at an extraordinary rate in the last five years. MIS procedures are optional, but they are evolving at a rapid pace. The number of da Vinci procedures performed globally increased by 82% between 2017 and 2021, demonstrating the system's demand.
The company had a successful start to the year. Revenue increased 4% year over year to $1.7 billion. The sale of disposable surgical instruments and accessories contributes to Intuitive's total revenue, which increased by 22% year over year to $986 million.
Since 2017, Intuitive has increased its installed base of da Vinci surgical systems from 4,409 to 7,779. Intuitive has dominated the robotic surgery market with an 80% market share and will continue to do so until 2031, according to BIS research.
Peers like Johnson & Johnson and Medtronic have also released robotic systems into the market. But even if a cheaper version is available, it will be difficult to outperform Intuitive. Hospitals invest heavily in purchasing the system and training surgeons to use it. The da Vinci system requires an initial capital investment ranging from $0.5 million to $2.5 million. It is far from likely that hospitals would want to switch.
By 2031, the global robotics market could be worth $17 billion, growing at a compound annual rate of 10%. This gives Intuitive plenty of room for long-term success. The company is also financially strong enough to support future growth plans.
