These two companies are capitalizing on sectors that show promising growth potential. Investing in the stock market should be seen as a long-term commitment rather than a quick way to make a fortune. Sure, investors can witness a rapid increase in the value of their shares over a short time, such as six months. However, consistently relying on short-term profits is usually an unreliable strategy.
Instead, throughout ten years, top-performing stocks usually yield significantly higher returns almost inevitably. Given this context, let’s focus on two companies, Intuitive Surgical (ISRG 1.54%) and Teladoc Health (TDOC 2.58%), whose stocks are worth keeping for the next decade and even beyond. Let’s delve in.
1. Intuitive Surgical
Leading the pack in an industry set for continuous growth, Intuitive Surgical owes its success to its da Vinci system, the robotic-assisted surgery (RAS) market pioneer. The system facilitates minimally invasive surgeries, resulting in better patient recovery. Instead of making large incisions to access internal organs, these surgeries use minor cuts and tiny, multifunctional instruments.
The company generates revenue by selling its high-cost da Vinci devices, which are priced between $500,000 and $2.5 million, along with its supplementary instruments and accessories, the sales of which depend on the volume of procedures. The company’s income will correspondingly rise as robotic surgeries become more prevalent. This is why competitors are trying to break into the market Intuitive Surgical dominates.
Major healthcare firms like Medtronic and Johnson & Johnson are making their foray into the promising RAS market with their respective devices. However, investors need not overly worry about Intuitive Surgical’s future as it enjoys a substantial advantage from various fronts. Firstly, the high cost of the da Vinci system discourages healthcare facilities from switching to competitors due to high switching costs.
Moreover, training doctors to use the machine is time-consuming and costly. Additionally, the company’s innovation is safeguarded by patents. It holds over 4,300 active patents and more than 2,100 pending as of the end of 2022. Just like it did in the past, Intuitive Surgical is poised to continue growing its revenue and earnings throughout the next decade, delivering impressive returns.
2. Teladoc
Telemedicine’s popularity surged amid the pandemic and is more than a passing trend. This technology is here for the long haul as it offers patients convenience and cost savings by enabling them to access medical care from their homes. Teladoc, one of the prominent telehealth platforms, has shown exceptional growth in various aspects over the past three years, including a significant rise in revenue.
Teladoc’s visits and memberships are also on the rise. For example, the company reported 36.7 million U.S. paid memberships at the end of 2019, which rose to 84.9 million by the first quarter, not counting its BetterHelp therapy platform, which has gained significant momentum in recent years.
The company’s bottom line has been a concern for investors, with significant net losses reported last year due to non-cash impairment charges associated with an acquisition. However, Teladoc has recovered from that setback. The company projects a full-year net loss per share of between $1.70 and $1.25, a considerable improvement from the previous year’s $84.60 and the year before that, $2.73.
Despite this, the company’s share price remains lower than its pre-pandemic levels in late 2019. However, one widely used metric, the price-to-sales ratio, Teladoc
shares appear reasonably valued, with any figure below two generally considered good.
Although Teladoc has high gross margins, its marketing expenses are considerable. This is expected considering the stage at which the company currently is. Still, once it becomes a well-established firm, these marketing expenses are expected to reduce, leading to increased profitability.
Teladoc offers significant growth potential at its current levels. The company is expected to make consistent strides in telemedicine over the next decade, increasing its revenue and eventually becoming profitable well before this period ends. Such progress will be beneficial for long-term investors.
Intuitive Surgical and Teladoc are situated in sectors with significant future potential. While the former benefits from its leadership in the robotic-assisted surgery market, the latter is poised to leverage telemedicine’s rising popularity and necessity. Their growth trajectories suggest these are stocks to buy and hold for the long term, particularly for the upcoming decade. While investing always carries risk, the strength of these companies makes them compelling considerations for those looking to participate in promising industry trends.
