A Promising Penny Stock for the New Year

If you want a cheap stock that’s ready for great things, this is the perfect option on the TSX today.

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. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. 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, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest.

Published February 21, 8:30 pm EST

As we usher in the new year, many investors are on the lookout for promising Canadian penny stocks that could offer substantial returns. One company that stands out in the healthcare sector is WELL Health Technologies (TSX:WELL). Let’s delve into what makes WELL Health a compelling consideration for your 2025 investment portfolio, especially at this price.

WELL Health

WELL Health Technologies is a digital healthcare company focused on leveraging technology to empower healthcare practitioners and their patients globally. The company operates a diverse portfolio, including primary healthcare facilities, electronic medical records (EMR) services, telehealth platforms, and digital health solutions.

In the third quarter (Q3) of 2024, WELL Health reported record revenue of $251.7 million. This marked a 23% increase from the same period in 2023. This growth was primarily driven by a 23% organic increase, underscoring the company’s robust expansion strategy. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also saw a significant rise. It reached $32.7 million in Q3 2024, a 16% improvement compared to the previous year. These figures highlight WELL Health’s effective cost management and operational efficiency.

A notable achievement for WELL Health was surpassing the $1 billion annualized revenue run rate ahead of plan. This milestone reflects the company’s accelerated growth trajectory and its ability to scale operations effectively. Furthermore, the company achieved a record 1.5 million total patient visits in Q3 2024, a 41% increase compared to the same quarter in 2023. This surge in patient interactions underscores WELL Health’s expanding footprint in Canadian and U.S. markets.

More to come

WELL Health’s growth strategy includes strategic acquisitions to enhance its service offerings. The company has a strong pipeline with 17 signed letters of intent and definitive agreements pending closure, representing over $100 million in annual revenue. These acquisitions are expected to bolster the company’s presence in the Canadian healthcare sector.

Embracing innovation, WELL Health has launched new services such as a weight care and GLP-1 offering in Canada through its Tia Health virtual care platform. This initiative demonstrates the company’s commitment to expanding its digital health solutions to meet evolving patient needs.

Looking ahead, WELL Health has raised its 2024 annual revenue guidance to between $985 million and $995 million, reflecting confidence in its growth prospects. The company also expects adjusted EBITDA to be in the upper half of $125 million to $130 million, indicating a focus on profitability alongside expansion.

Bottom line

Analysts have noted WELL Health’s strong performance, with the company reporting adjusted net income of $13 million, or $0.05 per share, in Q3 2024. This stability in earnings per share compared to the previous year suggests consistent financial management. While WELL Health’s stock is currently trading slightly above traditional penny stock levels, its rapid growth and strategic initiatives make it a noteworthy consideration for investors seeking exposure to the burgeoning digital healthcare sector in Canada.

As with any investment, it’s crucial to conduct thorough research and consider your individual financial goals and risk tolerance. WELL Health Technologies presents a compelling case with its impressive financial performance, strategic growth initiatives, and commitment to innovation in healthcare. As we step into 2025, WELL Health stands out as a promising player in the Canadian healthcare landscape.