It’s no secret that some health care stocks are a long way from their highs earlier this year. However, large withdrawals can provide great buying opportunities for long-term investors. In this Motley Fool Live Video recorded on May 17thCorinne Cardina, director of the health and cannabis bureau, and Keith Speights, contributor to the Motley Fool, discuss four unstoppable health stocks to buy on the go.
Corinne Cardina: We’ll spend the next 10 minutes talking about the market turmoil we’ve seen over the past few weeks. There was a sell-off that is definitely focused on the tech sector. But there are also plenty of health stocks that are down a bit. Keith, I asked you to give me a couple of stock ideas that look particularly attractive at prices today, so that of course to keep them long term. Where do you want to start
Keith Speights: Well I would start with that Teladoc health (NYSE: TDOC)is the ticker there TDOC. Teladoc is down more than a bit, it’s over 50% off its highs earlier this year. The obvious question is why this stock has fallen so much right now. I think a lot of this has to do with investor concerns that Teladoc’s growth rate is slowing. In all honesty, I think that’s to be expected.
Given the massive surge in telemedicine adoption over the past year, naturally sparked by the COVID-19 pandemic, one would expect Teladoc’s growth rate to slow after such an incredible year in 2020. However, I believe that Teladoc still has immense growth potential. I am a shareholder, by the way.
Cardina: Me too, I have a share. [laughs]
Speights: I was a fan of Teladoc Health. Look, the company has a lot of potential, even just in its existing customer base. There are many employees and family members with existing Teladoc customers who are not yet using the company’s services and products. So there is a really big opportunity, even if Teladoc hasn’t even won a new customer, just by tapping more market potential with existing customers.
Incidentally, it has over 40% of the Fortune 500 as customers. There are some large companies as well as many smaller companies. But I also like Teladoc’s ability to sell other parts of this platform. Teladoc acquired Livongo Health last year, which gives the company a promising, fast-growing, digital platform for managing chronic conditions, particularly diabetes and hypertension.
I think Teladoc has a great opportunity to sell this Livongo platform as well as some of these other products and services to its existing customer base. This is a great opportunity for Teladoc. I think this is a stock that is being beaten a lot more than it deserves, and I think you will see it come back. I don’t know when, I won’t predict when she will come back, but I think in the long run Teladoc Health will be a big winner.
Cardina: I am really interested in your attitude towards this. I think the slowdown in growth wasn’t unexpected. They were looking for a growth engine when they merged with Livongo. However, I think investors need to see cross-selling and synergies temporarily manifest in relation to their thesis. As you said, you don’t have to expand your membership base to increase your income. They can do a lot with the existing membership base they have.
We’ll keep an eye on that. What’s your next health inventory that will look great on the go?
Speights: There’s one other stock, and I’m not a shareholder in that stock, by the way. Accurate Sciences (NASDAQ: EXAS). EXAS is the ticker there. Exact Science, the last thing I looked at was at the stadium, which was 40% below its peak earlier this year.
The company currently has two main businesses. It sells the Cologuard test, which is a colorectal DNA test, as well as the Oncotype test, which is a cancer risk assessment test for different types of cancer. The company has a really sizable, overall addressable market.
I think colon cancer screening is about an addressable market of $ 18 billion. In the multi-cancer screening arena, which includes liquid biopsy, there is an even larger market of around $ 25 billion. Minimal monitoring of residual disease and relapse, there is another $ 15 billion market. Overall, you’re talking about an addressable market close to $ 60 billion, if that is where I count. Exact Sciences’ revenues are not even a fraction of that. I think this is a company with a lot of growth potential.
There are other players in some of the markets in which the company operates. There are a few other players on the liquid biopsy, but I think Exact Sciences will be one of the winners there. It’s another stock that has been hit a lot, but I think it might bounce back.
Cardina: Let’s talk about a slightly riskier stock for investors who are a bit more risk tolerant, maybe even a longer time horizon. What’s your third health stock that looks good at these lower prices?
Speights: There’s one stock Brian and I have talked a fair bit about, and I’m sure you have talked a fair bit about it on some of your Fool Live shows too, Corinne. CRISPR Therapeutics (NASDAQ: CRSP). Ticker there is CRSP. CRISPR is around 50% below its highs, and the company has some promising gene-editing therapy targeting some rare blood diseases. Sickle cell disease and beta thalassemia. This therapy really offers the promise of offering an effective cure for these diseases. The early-stage tests are really, really good.
CRISPR Therapeutics has teamed up with a major biotechnology Vertex Pharmaceuticals. Ticker is VRTX. I am a holder of shares in Vertex. I don’t own a CRISPR, but Vertex likes the company’s sickle cell disease and beta thalassemia therapy so much that interest has increased. I think there is a really big opportunity there in the long run.
CRISPR Therapeutics also offers several commercially available CAR-T therapies for cancer that are in promising clinical trials. Even after the sharp decline, the company still has a market capitalization of around eight billion dollars.
This is one of Cathie Wood’s favorite stocks. Your Ark ETFs have been scooping up stocks over the past few weeks. I think it’s risky, it’s early days, but CRISPR Therapeutics is the stock that could pay off in large measure if the program is successful.
Cardina: Brilliant. I’ll be talking about gene editing stocks on Friday at 3am. We will rate CRISPR. Editas, and Intellia. If you would like to learn more about gene editing stocks, please come back and see us there. The latter, what’s our last health inventory looking great on the go?
Speights: There’s one other stock I’ve had my eye on for a few weeks and that’s it Twist Bioscience (NASDAQ: TWST), the ticker there is TWST. Twist is more than 50% below its highs earlier this year.
This is another genomic stock that is high on Cathie Wood’s list for her ARK Genomic Revolution ETF, by the way, the ticker there is ARKG. Twist has a market cap of $ 4.5 billion. The company makes synthetic DNA and has 21 partners in the biopharmaceutical industry who use its technology in drug development. The company is investigating the storage of DNA data. You have some interesting options.
I haven’t pulled the trigger yet on buying the stock, I’m still watching it and checking to see if I want to stick my toes in the water with Twist Bioscience, but it’s another relatively high risk but high potential stock and such it one that I will definitely see in the future.
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