In order to derive sizeable returns in the stock market, you need to identify growth stocks that are capable of improving revenue and earnings at a consistent rate. You need to have a long-term view when you enter the equity markets as stocks and indexes are prone to volatility and turbulence in the short term.
The S&P 500 has experienced 38 market corrections since 1950 but has managed to gain momentum after every decline to trade currently at record highs. If you are patient enough and allow your investments to benefit from compounded gains, total returns can easily crush the broader markets over time.
Here, we look at two growth stocks that can increase investor wealth in 2021 and beyond.
One of the top performers of 2020 and amid the COVID-19 pandemic was Teladoc Health (NYSE: TDOC), a stock that’s currently trading 46% below record highs allowing you to buy the dip. While investors might think that Teladoc is a company that benefitted immensely due to COVID-19, you also need to know that the company experienced stellar growth prior to the pandemic.
The number of virtual visits on its platform rose from 4.1 million in 2019 to 10.6 million in 2020. However, the company’s sales also rose from $233 million in 2017 to $553 million in 2019. It almost doubled to $1.09 billion in 2020 driven by Teladoc’s big-ticket acquisition of Livongo Health.
While top-line growth is set to decelerate going forward, it is still expected to increase by 83.6% to $2.01 billion in 2021 and by 29% to $2.6 billion in 2022. The developed markets are witnessing a transformation in the telehealth space and Teladoc is at the forefront of this change.
Right now, virtual visits are convenient for patients while allowing physicians to keep in touch with chronically ill patients and regularly monitor their vitals. There may be times where physical examination is irreplaceable but digital-health solutions are fast disrupting the medical space.
Teladoc’s acquisition of Livongo Health will be a key driver of growth in the upcoming years. Livongo Health has a huge database of patients with chronic illnesses such as diabetes and tries to leverage artificial intelligence technologies to send these members with health tips to lead healthier lives. Livongo was already profitable prior to its acquisition and will be accretive to Teladoc’s bottom line. Wall Street expects Teladoc to improve its loss per share from $5.36 in 2020 to $1.05 in 2022.
Now, Livongo is looking to expand its suite of services to include people suffering from hypertension and weight management issues.
An e-commerce stock that has gained an astonishing 1,600% since its IPO in late 2017, Sea Limited (NYSE: SE) is currently valued at a market cap of $144.5 billion. Sea Limited is a Singapore-based company that operates in the e-commerce, digital payments, and online gaming vertical.
Currently, Sea generates all of its positive EBITDA from the gaming business. It ended Q1 with almost 650 million active gamers of which 12.3% were willing to pay, up from 8.9% in the prior-year period. While the pandemic has acted as a tailwind for gaming companies, Sea Limited has gained massive traction among its user base.
Sea Limited’s online shopping application called Shopee is among the most well-known e-commerce platforms in Southeast Asia and is now rising in popularity in Brazil as well. In Q1, Shopee’s gross merchandise volume rose 153% year over year to $12.6 billion.
Finally, its fintech business also has multiple growth drivers given that several Asian countries are still underbanked. Sea Limited offers digital mobile wallets to users and ended Q1 with 26 million paying customers and $3.4 billion in wallet payments.
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