Home » Investing » WELL Health Stock: Buy, Sell, or Hold?
WELL (TSX:WELL) stock has some strong reasons to consider it as a long-term hold, with full-year earnings due that could shed some light.
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Amy Legate-Wolfe
Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances.
Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities.
Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. Amy’s work can be found regularly on the Financial Post and MoneyWise Canada.
When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog Finley, and travel.
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Investors in WELL Health Technologies (TSX:WELL) have been champing at the bit to learn more about the company’s full-year earnings. Earnings have been a huge catalyst for growth over the last few months, shifting from growth from inflation and interest rate announcements.
WELL stock could very well be the next one to see a surge or drop after earnings. And it will likely all come down to the outlook. So, let’s look at some reasons to consider buying, selling, or holding the stock ahead of its full-year release.
Buy
When it comes to growth potential, WELL stock is one to beat. The high-growth company has seen more and more growth in the telemedicine and digital health space over the years, which already is a rapidly growing industry. Analysts in fact predict that strong revenue growth will continue for WELL stock for years to come. And this could help it exceed beyond the broader healthcare industry.
Part of this comes down to its resilient business model. WELL stock generates high percentage increases from recurring revenue, with 95% of revenue coming from subscriptions and service fees. This provides the stock with stability rather than reliance on product sales. Furthermore, this is within the healthcare sector, which provides more stability compared to the economy at large.
Finally, WELL stock has proven time and again to make strong, strategic acquisitions that help expand its reach and services. This should help the company continue to fuel further growth, with full-year earnings painting a clearer picture.
Sell
Now this is certainly a rosy picture, but there are some issues WELL stock will continue to need to tackle. For instance, WELL stock shows strong growth potential, but its stock price might already reflect that expectation. Therefore, even after shares have surged and come back down, there still might be little room for any significant price appreciation in the near term.
Furthermore, the telemedicine sector isn’t a secret to success. The space is heating up, and established players along with new entrants are all wanting a piece of the action. That increased competition could put a damper on any growth in margins and prospects for WELL stock.
Then there are those acquisitions I was talking about. While they’re great for expanding, they cost money. Those integrations bring along with them their own set of risks. With a company that relies so heavily on acquisitions for growth, integration success will be key. So, any bumps along the road could hinder progress.
Hold
Investors considering WELL stock as a long-term hold certainly then do have some factors to consider. Overall, the company does seem to have some strong reasons to buy or hold the stock, given its past success and future expansion opportunities.
That being said, companies that edge in on its acquisitions strategy or macro economic factors could all push the stock lower as well. We’ve already seen this in the past.
But what I like about WELL stock comes down to one thing and one thing only: recurring revenue. That 95% of its revenue is tied to subscriptions and service fees is excellent. That’s predictable cash flow you can bank on for long-term growth and stability. And for now, that’s enough for me to continue holding the stock.
