The ongoing trade tensions, marked by tariffs and counter-tariffs, have sent shockwaves through the global economy, fueling uncertainty and sparking concerns about inflation and slower growth. This turbulence has weighed heavily on the broader equity market, pulling down even some of the fundamentally strong Canadian stocks.
However, this downturn presents investors with an opportunity to scoop up high-quality TSX stocks at discounted prices, particularly those resilient to trade disputes and economic slowdowns.
So, if you have $1,000 and plan to invest in a stock that could soar despite President Trump’s tariffs, WELL Health (TSX:WELL) is my top pick. Notably, now might be the ideal time to buy, as the stock has recently pulled back and is trading at an attractive valuation.
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Why WELL Health amid tariff concerns?
This digital healthcare company operates the largest network of clinics in Canada and offers essential primary care and other diagnostic services. The company also provides proprietary software and technology solutions to clinics and healthcare professionals. WELL Health also provides omnichannel healthcare services in the U.S. markets.
What makes WELL Health attractive is its insulation from U.S. tariff risks. The company has clarified that it has no exposure to U.S. tariffs on Canadian goods, and even if future tariffs were imposed on services, WELL would remain unaffected. This is because its healthcare software platform and care delivery capabilities are not currently offered on a cross-border basis.
Another significant advantage for WELL Health is its high exposure to the U.S. dollar. Over 60% of its revenue and cash flow are generated in U.S. dollars through its American operations. This means that even if economic conditions fluctuate, the company benefits from its earnings being tied to a strong currency.
While tariffs and economic uncertainty can create volatility for many industries and lead to economic slowdowns, healthcare remains a defensive sector. The sector remains recession-resilient. This makes WELL Health an attractive investment, as it continues growing while remaining shielded from many external risks affecting other industries.
Solid financials and high growth outlook
WELL Health has delivered solid financials, reflected in its $1 billion annualized revenue run rate. Further, its strategic acquisitions, impressive growth in patient visits, and strong cash flows position it well to deliver solid returns.
During the last reported quarter (Q3 2024), WELL Health reported an organic revenue growth of 23% year over year. Also, WELL Health’s adjusted earnings before interest, taxes, depreciation, and amortization rose 16% from the year-ago quarter. The company also witnessed a 31% organic growth in patient visits in Q3.
Looking ahead, WELL Health is taking steps to accelerate growth, focusing on its robust acquisition pipeline and expanding its omnichannel healthcare network. Moreover, WELL Health is leveraging artificial intelligence (AI) technology to develop new products to support its financials and share price.
Further, its focus on enhancing its cash flow, reducing debt, and minimizing share dilution are positives. Notably, WELL Health’s ongoing cost optimization is likely to enhance profitability, positioning it well to sustain this growth momentum and deliver significant returns.
Attractive valuation
While this digital healthcare company is growing rapidly, WELL Health stock is trading attractively on the valuation front. The stock is down about 24.2% year to date, which has driven its valuation lower. The stock trades at the next-12-month enterprise value-to-sales multiple of 1.5, well below its historical average, representing a buying opportunity.
WELL Health’s improving profitability, high growth prospects, resilience to U.S.-Canada tariffs, and low valuation make it a compelling long-term bet.
