It's been a bumpy few years for many stocks across a range of industries and sectors. Some of the stocks that were most popular with investors a couple of years ago have now dropped considerably. Worries about the economy, the ongoing state of interest rates, lingering fears of another prolonged bear market, and a shift in investor interest following the worst of the pandemic have been a few catalysts that have driven these changes in investing patterns.
While a stock on sale is not a reason in and of itself to buy, some businesses that have been hard hit by shareholder pessimism may actually present a compelling opportunity for the forward-thinking investor. Here are two such stocks to consider for your portfolio as 2024 kicks off.
1. Teladoc
Teladoc Health (TDOC 3.05%) is one of many companies changing the trajectory of how healthcare could look in the years to come. The adoption of telehealth tools and technologies was already well underway before the pandemic, even as the era of stay-at-home orders and overburdened healthcare systems accelerated these trends. Rising demand from both healthcare providers and healthcare consumers is fueling a consistent, growing need for quality telehealth solutions.
Teladoc remains one of the companies at the forefront of this revolution, despite its loss of favor with many investors over the last few years. The stock is trading down around 22% over the trailing 12 months but still up about 30% from its 52-week low. Continued unprofitability, moderated growth (compared to the pandemic), and mixed investor attitudes toward growth stocks have all been factors at play in Teladoc's performance.
However, Teladoc is still growing on many key fronts, and I'd contend that a few years of choppy water haven't diminished the overall value proposition for the underlying business. The company is still one of the premier telehealth providers in the world and makes most of its money from access fees paid by large entities like insurance companies and employers. It makes a lesser portion from its services that are sold directly to consumers and generate per-visit fees.
NYSE: TDOC
Key Data Points
In the first nine months of 2023, Teladoc brought in revenue of $1.9 billion, a 10% increase from the same period in 2022. That top-line figure was driven by a 10% increase in access-fee revenue and a 7% boost in other revenue. Broken down by market, U.S. revenue totaled $1.7 billion for the nine-month period, up 8% year over year. International revenue totaled $269 million, a 21% increase from the year-ago period.
The company also recorded 14 million patient visits conducted through its platform in those three quarters. No one can say when the stock price will turn around, relative to the company's business performance, but as the company inches back toward profitability, its shares will likely follow.
Teladoc has been heavily slashing its net losses in recent quarters. Many of them were accounting losses, rather than actual operational ones. It also pulled in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $214 million in the first nine months of 2023.
I plan to hold onto this stock. Investors who find the business intriguing might be interested in buying on the dip for its long-term potential in the global telehealth space.
2. Pfizer
Pfizer (PFE 1.16%) is trading down by roughly 37% over the trailing 12 months. For context, that's about 8% above its 52-week low.
It's been a bumpy time for shareholders of this former highflier. Its stock received tremendous attention from investors during the height of the pandemic as its game-changing COVID-19 vaccine Comirnaty and antiviral pill Paxlovid brought in record sales and profits.
Now that demand for these products isn't anywhere close to what it was a few years ago, and the impact of that is clear on Pfizer's balance sheet, some investors have lost interest in the stock. Does that mean it's time to give up the ship? In my humble opinion, this seems shortsighted.
While it's true that Pfizer isn't probably going to witness the kind of growth it did during the pandemic -- at least for the foreseeable future -- that was a unique window in time when the company answered the call for an unparalleled consumer need and raked in a hefty payday, as a result.
Since that time, Pfizer has used the billions of dollars worth of profits its COVID-19 products produced and put them to very good use, fueling aggressive acquisitions as well as product development. It also has a robust existing lineup of blockbuster products, including Eliquis, its Prevnar family of vaccines, and Ibrance.
NYSE: PFE
Key Data Points
Pfizer's run of acquisitions has strengthened its foothold on key disease areas ranging from oncology to inflammation and immunology to neurology. In 2023, partly thanks to internal efforts and partly due to its acquisitive streak, Pfizer achieved more new product approvals from the U.S. Food and Drug Administration than any other company: seven in total.
Of those seven products -- which include an ulcerative colitis drug called Velsipity, a multiple myeloma drug Elrexfio, and an RSV vaccine called Abrysvo -- six are on track to reach blockbuster status in the coming years, given their addressable markets and consumer demand.
Pfizer is expecting billions of dollars of decline in COVID-19-related sales and the loss of patent exclusivity on core products in the coming years. However, it's expected that new launches expected in the coming months -- 19 launches or expansions in total over an 18-month period -- will bring annual revenue to anywhere from $70 billion to $84 billion by 2030, not counting any COVID-19 products.
That would represent a revenue increase of anywhere from 35% on the low end to 62% on the high end by 2030, compared to Pfizer's pre-pandemic annual revenue in 2019. Those are fairly solid 10-year revenue growth rates for a business at Pfizer's level of maturity. Pfizer could be on the cusp of a new period of growth, and investors could find that worth waiting for now.
