Wall Street Is Wrong (Again) About This 69% Winner

Wall Street Is Wrong (Again) About This 69% Winner

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We’ve got every reason to be proud of our eight-year track record of being early to top-performing tech stocks like Adobe Inc. (NASDAQ: ADBE), which has given us well over 1,100% in peak gains, and Microsoft Corp. (NASDAQ: MSFT), which has delivered more than 619% profits since we correctly identified then-incoming CEO Satya Nadella’s leadership chops back in 2014.

And I emphasize the word “early” here because, for tech investors, being “just in time” is often too late – at least, if you’re looking to maximize your profits.

A critical component of that winning tech investing strategy is knowing when to run toward a stock Wall Street is running away from, as we did earlier this month with our ARK Genomic Revolution ETF (BATS: ARKG) play; Wall Street’s “short term-ism” – its narrow focus on either this quarter or the next – has worked to our advantage countless times.

That’s happening right now, in fact.

If you’ve been with us for a while, you’ll remember back in August, 2020, I pointed to an ongoing “fire sale” in a beaten-down telemedicine company that made an $18.5 billion growth bet that spooked Wall Street.

The bet paid off for the company, and now, barely eight months later, it’s given us gains north of 69% – more than six times better than the S&P 500.

If you missed out on any of those profits, don’t worry: Turns out Wall Street is making the same expensive mistake again, giving us the chance to do some dollar-cost averaging in. And if you’re new, this week is the perfect time to start building a position, before what I think could be a stellar earnings report.

Let’s go over the ticker…

The Telemedicine “Fad” Looks Increasingly Permanent

The August 2020 move that had Wall Street running scared was Teladoc Health Inc.’s (NYSE: TDOC) $18.5 billion purchase of Livongo Health Inc. A big outlay, to be sure, but one I was confident would cement Teladoc’s position in the coronavirus-propelled telemedicine/telehealth segment.

Livongo makes devices that allow healthcare providers to remotely monitor health metrics such as blood pressure, blood sugar, weight, and even behavioral health – critical for health care from a distance.

Despite its clear disruptive potential in the $1.3 trillion U.S. medical market, Teladoc is grossly oversold once again. I believe Teladoc’s best performance is ahead of it; according to a Harris survey, 65% of consumers surveyed plan to use telehealth even after the pandemic ends.

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Wall Street, apparently, is convinced we’re all champing at the bit to go back to the doctor’s office…

Bunk.

Speaking just for myself and my wife, neither of us has actually, physically visited a doctor for a routine appointment – we do it all by phone and teleconference. It’s faster, with much less hassle, and zero worry of catching COVID-19 or any other bug from a sick or asymptomatic patient in the waiting room.

We were hardly alone; virtual visits rose 1,000% in March 2020 and another 4,000% by that April.

And even with 3 million-plus vaccinations per day and around 40% of American adults inoculated to one degree or another, we’re not looking to get that particular aspect of our lives back to normal anytime soon.

Not only do 60% of consumers agree, but in reality, this trend has been underway long before the coronavirus pandemic exploded. As far back as 2017, the American Hospital Association (AHA) noted the number of medical providers using telehealth had doubled in the preceding seven years.

Pandemic or no, Teladoc’s consumer appeal is undeniable. It has all the advantages I mentioned a moment ago, and its network of physicians deals in 450 specialties; there’s not a single “brick and mortar” urgent care facility or doctor’s office in the country that can bring that kind of medical firepower to bear on what ails you. Only the biggest hospitals come close.

That Teladoc does all this in full compliance with HIPAA privacy regulations and standard, clinical care guidelines is all the more impressive.

The “back office” numbers support my argument that this is a perfectly positioned stock that’s just getting started when it comes to lining shareholders’ pockets.

Teladoc Is Posting Great Numbers in Any Environment

Despite Wall Street’s mistaken belief that telemedicine is somehow a fad or passing craze of some kind, the number of “visits” using Teladoc’s platform has been growing at a compound annual growth rate of over 80%.

Recurring revenue has also jumped by more than 80%. Its sales have grown at an average of 56% a year; if the company maintains half that momentum, sales will double before 2024.

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And with Teladoc’s client list, that’s almost a certainty – more than 40% of Fortune 500 companies use Teladoc, and over 600 health systems use the firm’s platform. That means that by the end of last year, Teladoc’s network included over 11,000 physical care locations, for those not-infrequent times when patients need hands-on care.

Teladoc’s done-deal merger with Livongo is what sparked the August sell-off, and Wall Street can’t seem to shake that “hangover.” Never mind that Livongo’s medical devices are key to growing Teladoc’s business while maintaining a high standard of care – including artificial intelligence (AI) “nudges” for patients trying to stick to a prescribed regimen of some kind.

After the merger, Teladoc reported seemingly steep losses; $18.5 billion is a lot of money. But Wall Street’s thinking didn’t account for the fact that most of that was stock-based, and not actual operating losses. In other words, those “losses” didn’t actually involve Teladoc losing real money. Indeed, its negative earnings-per-share (EPS) figure has steadily improved over recent quarters and is expected to go positive when it reports its first-quarter 2021 earnings – analysts expect $0.59 a share.

This most recent sell-off catalyst seems to have been blocks of shares recently sold by two key insiders, both of whom still own the majority of their TDOC shares, according to SEC filings. Insiders can sell for a lot of reasons, and, for perspective, they own less than 4% of the company’s shares.

As I hinted at earlier, Teladoc reports earnings a week from today, on April 28, and while I’m expecting great news on a number of different fronts there, the “sell the news” phenomenon often means stocks sell off even with stellar performance. I think the smart move is to buy at market, add a little more at lower levels, and wait for Wall Street to come to its senses.

It just goes to show that my belief in being early can beat being “just in time.” 5G stocks are a great example. Look at what’s happened there: A lot of people out there right now searching for “5G stocks to buy” will end up owning AT&T, say, or T-Mobile, or Verizon, perhaps thinking they’re “just in time,” too. I’m afraid they could be in for disappointment. My research shows profits from directly investing in 5G have pretty much dried up; that ship has sailed. I believe the serious profit potential will come from the $1.4 trillion “backdoor” market sectors 5G has opened up – I think those companies are just getting started. In fact, 20 of them could produce 10X gains by the end of 2021. That could beat the 5G “giants” many times over. Click here to see my research on this…

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About the Author

Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That’s because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley “insiders” right to you…

  • He was one of five people involved in early meetings for the $160 billion “cloud” computing phenomenon.
  • He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
  • As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.

This all means the entire world is constantly seeking Michael’s insight.

In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse – years before the word “bailout” became a household word.

Silicon Valley defense publications vie for his analysis. He’s worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.

And even with decades of experience, Michael believes there has never been a moment in time quite like this.

Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.

To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.

His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.

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