Forget Teladoc: Buy This Canadian Stock Instead

Here’s why long-term growth investors may want to consider Canadian stock CloudMD (TSXV:DOC) over Teladoc (NYSE:TDOC) right now.

| More on:

Incorporated in 2013, CloudMD Software (TSXV:DOC) is a healthcare technology and service company focusing on healthcare delivery digitization. The company also owns and operates 100% of many clinics extending telemedicine and on-site services. It is regarded as an excellent Canadian stock with rapid growth potential.

Read on to know more as to why an investor should consider this stock in place of Teladoc (NYSE:TDOC).

Healthcare Technology Solutions at an Affordable Rate

CloudMD is a rapidly growing provider of healthcare technology solutions to patients, clinics, and enterprises. The company is presently making a significant push into Enterprise Health Solutions (EHS). It is doing so by extending a centralized one-stop or whole patient shop platform. It has integrated mental health, eye care, primary care, and other specialty care for insurance companies and employers.

This would result in making it quicker and easier in dealing with employee health issues. Additionally, this model also lessens a major issue: absenteeism.

The organization has recently made a range of intriguing acquisitions. The company is currently in the process of integrating these. Accordingly, CloudMD’s Pro-forma annualized revenue run-rate is anticipated to be roughly $140 million. This implies EBITDA of between $5 million and $10 million.

This TSX stock has been weak of late — similar to a majority of small caps featured in this space. This offers an excellent purchasing opportunity for investing in the digital health sector. Indeed, CloudMD’s reasonable valuation of less than three times revenue is attractive compared to peers trading at much greater multiples.

Strong fundamentals for this Canadian stock

In Q2, CloudMD posted revenue of $15.7 million. Compared to the revenue of Q2 last year, which was $2.8 million, this implies 461% year-over-year growth. That’s impressive.

Of course, the starting base upon which CloudMD was operating with last year was low. That said, this growth is notable for two reasons.

First, this Vancouver-based company has completed the realignment process in two major verticals besides EHS. This includes Digital Services and Clinical Services & Pharmacies (CSP). For the quarter, CSP accounted for revenue of $6.6 million. This is up from $2.3 million from the same quarter of last year. On the other hand, digital services accounted for revenue of $4 million compared to $500,000 in Q2 of 2020.

Secondly, CloudMD has processed a number of acquisitions last year and the first half of this year. The company carried out a couple of acquisitions during the quarter.

CloudMD closed a transaction valued at $60 million for VisionPros, which is a vertically integrated digital eyewear platform.  Then the company closed a $68 million transaction for Oncidium, which is a healthcare management company. Oncidium boasts of a clientele of more than 500 public sectors clients and companies.

With the acquisitions sorted, the company will likely focus on other areas for creating cross-selling opportunities. This includes organic growth across its ecosystem of customer bases and businesses.

Bottom line

CloudMD combines technology and healthcare in an efficient package. This telehealth company has grown like wildfire through acquisitions during the pandemic. It now caters to more than five million individuals across North America. This ranges from offerings of therapists to family physicians.

Those looking for a hyper-growth play don’t have to venture too far away from Canada to get it. This is a small-cap play with similar upside to rival Teladoc, with potentially more room to run in a hyper-bull market.

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 Chris MacDonald has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Teladoc Health.

More on Tech Stocks

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 »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.
Tech Stocks

Where Will Open Text Stock Be in 5 Years?

OpenText stock is one of the few tech stocks that's been around for decades. But does it have what it…

Read more »