When we invest with a long-term approach, we are bound to encounter dips in the market from time to time. These bad days could mark a great opportunity to watch your favorite companies.
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Teladoc (NYSE: TDOC) provides 24/7 medical care through phone and video consultations as well as the management of chronic care conditions thanks to its recent Livongo and InTouch Health mergers. The global telehealth market alone is forecasted to grow at a compound annual growth rate (CAGR) of 25.2% until 2027 when it will be worth $560 billion.
Teladoc has grown rapidly, with revenue jumping 145% year-over-year (YoY) to $383.3 million in Q4 2020 as total visits rose 139% to 3 million. Revenue for the full year increased by 98% YoY to $1.09 billion and total visits grew by 156% to 10.6 million. The growth potential for Teladoc is huge — it’s an innovative company with a higher quality and more affordable product pouncing on the healthcare industry which hasn’t seen disruption in recent decades. Since Teladoc merged with Livongo in 2020, it now has a total addressable market (TAM) of $120 billion in the U.S. alone. Paid memberships are growing too, increasing 41% YoY to 51.8 million members in Q4.
Virtual visits are the future, and Teladoc is well-positioned to be a first-mover in the space. As for the bear case, the company is still in high-growth mode and has yet to become profitable, carrying a hefty debt of $1.4 billion, with $787 million in cash and short-term investments on the balance sheet.
Cloud data storage company Snowflake (NYSE: SNOW), with a market cap of $75 billion just 6 months after going public, holds the title for largest software IPO ever. Snowflake benefits from a diverse product, specializing in cloud data lakes, data science, data exchange, and data engineering, and its first-mover advantage has given it a headstart in these revolutionary technologies that have yet to be deployed at their full potential.
Snowflake’s Q3 2020 revenue has grown 115% YoY to $149 million. Despite the pandemic, the company has grown its performance obligations to $928 million, a 240% YoY increase. Snowflake now has a total of 3,554 customers, who absolutely love the product, resulting in an incredible 162% net revenue retention rate. Snowflake’s high switching costs also ensure that when more competitors inevitably enter the market, customers will be discouraged from moving elsewhere. CEO Frank Slootman has an impressive resume, serving as the CEO of ServiceNow between 2011 and 2017 when it increased revenue from $100 million to $1.4 billion.
The bear case for Snowflake is that the company’s product has a high reliance on Amazon Web Services, Microsoft Azure, and Google Cloud Platform, which each have a direct incentive to develop similar products. This gives these tech empires some leverage over the company, but it’s not a dealbreaker.
Any Palantir Technologies (NYSE: PLTR) IPO investors saw impressive gains in recent months, but the stock is back trading at around the $24 mark at the time of writing, making for a great entry point into a high-growth company.
The company has hit some home runs recently, securing multiple lavish long-term government contracts. The governmental nature of Palantir’s contracts makes the details very secretive, but the company secured $150 million in new deals by the end of 2020, including the U.S. Army and the National Institutes of Health. Palantir saw revenues of $322 million in Q4 2020 while its earnings per share figure doubled what was expected, coming in at $0.06 per share. Its average revenue per customer for 2020 came to $7.9 million, a 41% increase from 2019. Palantir ambitiously announced it is expected to reach $5 billion in revenue in 2025.
The bear case for Palantir is that the 18-year-old company is still not profitable, though losses are slowly narrowing. Palantir has a low number of high-revenue clients, which can be alarming for investors long-term.
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