This novel coronavirus caused human tragedy, but there is some good coming out of it for Teladoc (NYSE:TDOC) and Teladoc stock. Today we focus on successes on Wall Street stemming from the crisis.
Demand for services from companies like Teladoc has exploded during the pandemic. They were well positioned to benefit from such a scenario. This has been a a win/win situation. Consequently, Teladoc stock is up 153% year-to-date, which is five times more than the Nasdaq. But the exciting part is its long-term potential after this mess abates.
The medical experts are hard at work to find a solution for the virus and they assure us that the vaccine is coming quickly. Meanwhile, people have developed habits in the last few months that will linger going forward.
Using services like the one that Teladoc offers makes a ton of sense. I’m not usually a fan of chasing fads but the interest in this service can be a trend that lasts. The convenience of having answers in the palm of our hands is definitely a good idea, so this company is poised to flourish for years.
The Opportunity for Teladoc Stock Is Real
This may turn out to be a sticky service so the users will likely be repeat clients even beyond Covid-19. People are constantly having mini medical crises. If it’s not a pandemic, it will be something else that causes us to reach for the convenience of such a service.
wtive to start looking for value now. Their asset is growth and this one has a bunch of it.
Ignore the Noise and Focus on the Future
Investors of Teladoc stock need to plug their noses and buy it for its long-term prospects more so that its current stats. In other words, ignore the traditional metrics of profitability, and concentrate more on growth. In this case user growth matters as long as they create the habits within the consumer. Then management can work on converting that to revenues down the line.
Meanwhile, Teladoc is caught in a whirlwind of voracious rallies and not all of them have the same fundamental setup as this one. As a result, there is extreme froth in these up-and-comers and sentiment could flip on the group. Teladoc stock will then suffer a major setback through no fault of its own.
Meanwhile, management is making bold moves like their merger with Livongo Health (NASDAQ:LVGO). Usually these build value through synergies and improve the offering to cast a wider net. The investment community liked the move as the stock got a few nods from analysts.
Get Long and Leave Room for Error
Investors who currently hold the stock should be ready for some turbulence ahead. They should also have enough conviction to ignore the noise when it comes. The bet on this stock requires patience because the rewards may be far out in time.
The options market offers alternative ways of getting long this opportunity while leaving plenty of room for error. Investors can sell puts 20% below current levels at $145 per share and collect $3 premium for it. This means that the investors would be long the stock right now and they won’t suffer any losses until the stock falls below $142.
Regardless of the method, the concept is a winner because Teladoc provides a solution that millions of people need on an ongoing basis. It is hard to deny the opportunity that lies within this. Moreover, the chart currently shows at least three levels of support between the current price and $145. Conversely, I anticipate resistance as Teladoc stock approaches $218 per share.
Nicolas Chahine is the managing director of SellSpreads.com. Join his live chat room for free here. As of this writing, he did not hold a position in any of the aforementioned securities.
