Regardless of your investing experience or risk tolerance, putting cash into stocks takes a certain tolerance for volatility and uncertainty. No investment has a guaranteed outcome. However, if you have the cash on hand and ability to invest, building a portfolio that stands the test of time doesn't have to be overcomplicated.
Investing in wonderful businesses, diversifying the ones you own, holding onto those great companies through the market's highs and lows, and avoiding traps like market timing can help you outpace the returns of the average retail investor through the years. If you're looking to build out your portfolio of great businesses, here are two names to add to the list for consideration right now.
1. Pfizer
Pfizer (PFE 0.55%) caught the attention of many investors when it became one of the leading contenders in the race to get a COVID-19 vaccine to market. Now, with a COVID-19 franchise, which includes the vaccine Comirnaty, which it developed with BioNTech, and its antiviral drug Paxlovid that generated about $57 billion in revenue in 2022 alone, investors might be wondering whether the future could contain much more growth for the pharmaceutical giant.
This is a company that has been in business since 1849. While the pandemic accelerated Pfizer's growth and brought it out of a period in which its growth story had decelerated, the company has been incredibly strategic about leveraging this latest boom in revenue and profits to pave a new path to growth. First, it is undertaking a series of acquisitions to boost its presence in areas like oncology, pain management, and immunology; and secondly, it is investing heavily in its pipeline.
In Pfizer's first-quarter earnings call, management affirmed that the company expects to release 19 new products in just the coming year or so. The company is targeting as much as $84 billion in non-COVID-related revenue by the year 2030. Bear in mind, Pfizer also has an impressive collection of blockbuster products that are already commercialized with a long-standing, first-to-market or market-leading advantage. These include products like cancer drug Ibrance and its Prevnar vaccine franchise.
Pfizer is still projecting around $22 billion in product revenue from Comirnaty and Paxlovid in 2023, while projecting $67 billion to $71 billion in total revenue for the full year. It's natural to expect that its revenue and earnings trajectory will moderate and change as Pfizer fulfills the multi-year supply agreements for its COVID-19 products and moves into a new phase.
At the same time, its shrewd use of the windfall of cash and profits it's raked in over the last few years bodes extremely well for this fresh era of growth. Long-term investors looking to buy and hold this healthcare stock for at least three to five years, if not longer, may do well to capitalize on this growth story.
2. Teladoc
Teladoc Health (TDOC -2.40%) was a leader in the telehealth space long before the pandemic. After a period of above-average growth when going to the doctor in person became a last resort for many healthcare consumers during the pandemic, Teladoc has understandably witnessed a deceleration from that heightened period. That, coupled with the company's continued unprofitability due to a series of impairment charges it took on to write down a 2020 acquisition, has soured some investors on the business.
Teladoc is still unprofitable, but its net losses are narrowing. In Q1 2023, it reported a net loss of $69 million compared to $6.7 billion in the year-ago period, $46 million of which was from stock-based compensation, which is an accounting-only loss, not an actual cash one. Another $8 million was related to restructuring costs from layoffs it announced earlier in the year. Overall, the considerable reduction in that bottom-line figure would appear to align with management's assertion that it is working diligently to move the company toward profitability.
Looking back over the trailing 12 months, Teladoc has raked in revenue of $2.5 billion, along with operating cash flow of $234 million. And in Q1 2023, Teladoc reported revenue of $629 million, up 11% year over year and driven by respective revenue growth of 5% in its Integrated Care segment and 21% in its BetterHelp segment. Bear in mind, that revenue figure was up approximately 40% on a two-year basis, 250% on a three-year basis, and 390% on a four-year basis.
In that context, one could argue that Teladoc is keeping up an impressive pace of growth, one that more than outpaces that of the roughly 24% growth the multibillion-dollar telehealth industry is expected to witness between now and 2030. No stock is without risk, and the recent market has tested the patience of investors.
However, if you're looking for a market-dominating business that has maintained a considerable moat and continues to leverage its diverse lineup of virtual-care businesses to meet the needs of healthcare consumers around the country and the world, Teladoc looks like a worthy contender for a multi-year buy-and-hold investment.
