Now before I go too deep into this, I want to say that I’m not out here to get on Shopify (TSX:SHOP) stock. That is, Shopify stock has made a lot of great moves in the last year especially — difficult ones that have now put the tech stock back in the good graces of investors, and for good reason.
But would I buy it above another strong tech stock? Honestly, not right now. Shopify stock has gotten higher and higher in share price. It’s now moving to that territory where I fear there could be some shakiness in the future. That’s why today, I would perhaps leave Shopify stock alone until more positive market sentiment comes out.
Instead, WELL Health Technologies (TSX:WELL) could be a far better option.
Why WELL Health
WELL stock is an excellent tech stock to consider right now in my books. The company continues to be undervalued based on not just its performance, but even its industry. WELL stock came around before the pandemic, launching and expanding its virtual healthcare model. However, when the pandemic hit we saw tech and healthcare stocks surge in share price. That included WELL stock.
Yet we also saw these companies drastically fall soon after restrictions came to an end. That’s despite a continued, not just positive but record performance by WELL stock. The company has become the largest outpatient clinic in Canada. It’s now rapidly expanding across the United States as well.
And as for earnings? WELL stock continues to achieve record earnings, which include organic growth. So, let’s take a look at this for the tech stock.
More records
WELL stock reported its third-quarter earnings report earlier this month, and investors were disappointed to see that it didn’t meet analyst estimates. Even so, the company achieved record quarterly revenue yet again, hitting $204.5 million. It also reached record adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) at $28.2 million. It was the 19th consecutive quarter of record performance!
The tech stock also surpassed 1.03 million patient visits, and upgraded its guidance for 2023. It now expects revenue between $755 and $765 million thanks to the organic growth achieved throughout the year. Further, it should achieve $900 million in annual revenue for 2024 through organic growth.
So, why did shares drop?
AI partnership
It seems investors weren’t all that impressed with the tech stock for missing out on earnings estimates. However, it could also be due to a strategic transaction between WELL stock and HEALWELL. HEALWELL sold a portion of its clinic assets to WELL stock. The pair entered a strategic alliance, positioning HEALWELL to “become a significant player in the multi-billion-dollar data sciences and preventative care industry.”
HEALWELL uses artificial intelligence (AI) to help doctors and patients deliver access and patient outcomes while also reducing healthcare costs. This will help both companies expand opportunities in AI for healthcare. Yet while HEALWELL will be paying off debts, WELL stock will be paying for it. However, it’s expected to add more than $21 million in yearly revenue for the tech stock’s business.
Here’s the thing. While investors may not have liked a new purchase, WELL stock and its management have proven their success. Theirs is one of growth, and there is so much more room to grow — not just in North America but beyond. Shares are down from 52-week highs, but they’re still up 34% in the last year. And as we enter a strong 2024, that should likely climb higher — even higher, potentially, than Shopify stock.
