CloudMD (TSXV:DOC): The Next WELL Health (TSX:WELL) Stock?

CloudMD (TSXV:DOC) stock has the potential to become one of Canada’s most lucrative telehealth opportunities.

| More on:

If you invested in WELL Health Technologies (TSX:WELL) in 2016, your capital would be worth over 7.6 times as much by now. The telehealth startup has been one of the most successful technology startups in Canada. Now, another emerging startup, CloudMD Software & Services Inc. (TSX:DOC) stock could be on the same course. 

CloudMD stock has already delivered a 330% return since going public in June. That’s better than WELL stock’s return over the same period: 196%. In other words, savvy investors who jumped into this stock early have outpaced Canada’s most noteworthy healthtech startup during this crisis. 

Can CloudMD stock sustain this incredible run? Is it better than WELL Health? Here’s a closer look. 

Telehealth outlook

There’s plenty of room for more than one telehealth giant. This industry is simply so nascent and offers so much potential for growth, that I wouldn’t be surprised if we had even more telehealth startups emerge over the next few years. 

The global telehealth market is expected to double from US$25 billion (C$32.9 billion) this year to over US$55.6 billion (C$73.26 billion) by 2025. Even then, telehealth has barely scratched the surface of global healthcare – a multi-trillion dollar industry. 

Meanwhile, WELL stock and CloudMD stock are worth $1.16 billion and $326 million respectively. They both have plenty of potential to capture market share as more people adopt virtual clinic sessions and mobile consultations over the next decade. However, if you’re trying to choose the better option between these two, you might want to dig into their fundamentals.

CloudMD stock valuation

Like any other startup, CloudMD isn’t profitable yet. Instead, the company’s valuation relies on its revenue and growth rate. CloudMD stock is currently trading at a price-to-sales ratio of 31.2. By comparison, WELL stock is trading at a P/S ratio of 30.4. In other words, the startup’s valuation is justified based on trailing sales. 

However, WELL Health has some clear advantages over its smaller rival. The company has recently entered the United States, which is the largest telehealth market in the world. The company is also three year older, has more doctors, more software clients and a wide network of physical clinics that sets it apart from the competition. 

I would argue that exposure to the United States and funding from Hong Kong billionaire Li Ka-Shing puts WELL Health in a better position to grow over the long term. Based on this assumption, WELL stock is clearly a better option for growth-seeking investors. 

Bottom line

CloudMD stock has the potential to become one of Canada’s most lucrative telehealth opportunities. It’s only the second pure-play virtual health startup that’s publicly listed. The first, WELL Health, has already delivered stunning returns over the past four years. 

However, I believe the larger, older company is better positioned for growth over the long term. While both stocks have the potential to deliver multibagger gains, WELL Health is my preferred option.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vishesh Raisinghani owns shares of WELL.

More on Tech Stocks

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

4 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Kinaxis stock has a strong past. But there is even more to look forward to from this top tech stock.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

The Future of AI: Best Canadian Stocks to Buy Now

Here are two of the best AI-focused stocks in Canada that you can consider adding to your portfolio before it’s…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 TFSA Stocks to Buy Right Now With $7,000

Are you looking for growth stocks that can help you maximize the tax-free withdrawals of the TFSA? This article is…

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »