Last year may have scared investors away from the stock market. However, savvy investors understand that the stock market and risk go hand in hand. While the S&P 500 suffered last year, it has been faring well so far this year. As the market recovers, some growth stocks with strong fundamentals may thrive.
Two such revolutionary companies are virtual healthcare leader Teladoc Health (TDOC -4.64%), and robotic surgery leader Intuitive Surgical (ISRG -1.93%). Let's take a closer look at why investors should consider these stocks right now.
Image source: Getty Images.
1. Teladoc Health
Teladoc specializes in providing a healthcare platform that connects doctors to patients virtually. During the pandemic, the company's demand skyrocketed. Now that the emergency period of the pandemic has ended, most healthcare facilities are fully operational, yet Teladoc continues to grow its revenue and patient visits.
In the company's first quarter, total revenue increased 11% year over year to $629 million. Domestic and international revenue both increased in the period.
The total number of patient visits on the Teladoc platform increased to 18.5 million in 2022, up from 10.6 million in 2020, when telehealth demand was at its peak. Its total visits surged by 8% in the first quarter to 4.9 million. This indicates that virtual healthcare demand still exists and is increasing as patients continue to benefit from it.
The company is not yet profitable, but it is working hard to become so. Its net loss in the first quarter was $69 million, down from a massive $6.6 billion loss in the same quarter last year (which included a noncash goodwill impairment charge).
Management anticipates another successful year. According to various patient surveys, telehealth services allow patients to have a relaxing and stress-free health exam while saving them time, energy, and money. By 2027, the global telehealth and telemedicine market is expected to be worth $286 billion, with a compound annual growth rate of 26%. Teladoc, which is already a market leader, might reap the advantages of this rapidly expanding market.
2. Intuitive Surgical
With its cutting-edge da Vinci systems, Intuitive Surgical has a monopoly on the robotic surgery market. These systems are intended to assist surgeons in performing minimally invasive surgeries (MIS) by providing them with a 3D high-definition view of the surgical field, as well as tiny, machine-manipulated instruments for precise positioning.
The aging population is increasing the demand for MIS procedures. This is most likely why, despite being in the business for 28 years, Intuitive's revenue and earnings have increased drastically over the last five years.
Between 2017 and 2021, Intuitive saw an 82% increase in the number of da Vinci procedures performed globally. The number of systems it has installed globally has grown from 4,409 at the end of 2017 to 7,779 as of March 31 -- which is impressive growth.
Intuitive's management anticipates that the number of installed systems will continue to grow in the coming years. The company not only sells but also leases the systems, resulting in recurring revenue. Adding to top-line growth is the sale of disposable surgical instruments and accessories used by the machines, which accounts for 70% of total revenue.
The global robotics market is projected to grow at a compound annual rate of 17%, reaching $18 billion by 2031.
An early-mover advantage has provided Intuitive with a competitive moat. According to BIS Research, this has resulted in it holding 80% of the market share. It may continue to do so until 2031. Hospitals invest heavily in purchasing these systems, as well as time, money, and energy in training surgeons to use them. It is highly unlikely that hospitals will switch to a cheaper product from Intuitive's peer over a tried-and-true successful product.
Intuitive's continued growth, strong balance sheet, and outstanding long-term prospects make it an excellent buy right now.
Teladoc and Intuitive are both excellent long-term investments. However, keep in mind that growth stocks carry some risks. Healthcare stocks are likely to go through market highs and lows. As a result, investors with a high risk tolerance can choose to hold a small stake in these two in addition to a diversified portfolio of stable stocks.
