Best Growth Fund: Facebook or Teladoc Health?

Even popular stocks can run into problems. Facebookwith (NASDAQ: FB) since the beginning of the year, shares are up more than 20%. Recently, however, the social media giant has come under fire for its potential negative impact on the mental health of teenage girls.

Meanwhile, Teladoc Health (NYSE: TDOC) did not experience any controversy. But health care stocks fell more than 50% below their highs since the start of this year. The sell-off was driven primarily by investor concerns about a slowdown in the growth of Teladoc members.

Wall Street analysts remain optimistic about these growth stocks. What’s better now? This is how Facebook and Teladoc compare to each other.

A man in front of a laptop looks away from the screen.

Image source: Getty Images.

Case for Facebook

The controversy surrounding Facebook could increase the likelihood of government regulatory intervention. But there are a few more compelling reasons to buy stocks.

Most importantly, Facebook’s business continues to grow steadily. Revenue rose 56% year-over-year in the second quarter to $ 29.1 billion. Profits more than doubled to $ 10.4 billion.

In June, more than 1.9 billion people used Facebook platforms daily, up 7% from last year. In the second quarter, there were 2.9 billion monthly active users, which is also 7% more than the previous year. Social media issues are not new, but people around the world are still attached to Facebook and Instagram.

Facebook has a lot more opportunities ahead than social media. The company is already a leader in virtual reality with its Oculus VR devices. The company is investing heavily in leveraging its VR expertise to create the next version of the Internet: the metaverse.

Mark Zuckerberg, founder and CEO, said during a conference call in the second quarter of the company that he believes the metaverse “is one of the most exciting projects we’re going to work on in our lives.” It could also be the biggest for Facebook. If the metaverse is aligned with Zuckerberg’s vision, his company’s growth could accelerate significantly over the next two decades.

Case for Teladoc Health

As mentioned earlier, Teladoc’s main problem right now is the slowdown in member growth. However, this slowdown is not surprising given the landmark year the virtual service provider enjoyed in 2020 due to the COVID-19 lockdown.

It is also important to note that Teladoc continues to demonstrate strong growth in many areas. Revenue per member per month in the second quarter grew 142% year on year and 10.3% sequentially. The company’s telemedicine platform utilization rate jumped to 21.5% in the second quarter from 16% in the previous year and 19.6% in the previous quarter.

Teladoc now has a chronic disease management platform thanks to its acquisition last year of Livongo Health. The company has tremendous cross-selling opportunities between its telemedicine clients and Livongo’s customer base.

Upcoming growth drivers include new product launches such as the Primary360 virtual primary health care platform and the digital mental health platform myStrength Complete. The company also expects strong growth starting in 2022, thanks to a new agreement to provide solutions for the treatment of chronic diseases to members of the major insurance company Health Care Service Corporation.

The long term looks even better. McKinsey & Company predicts the US virtual services market could grow to $ 250 billion. As the clear leader in this market, Teladoc must be in an excellent position to provide unprecedented returns to patient investors.

Best Growth Stock?

I love (and own) both of these growth stocks. I believe Facebook and Teladoc should be big winners in the next decade and beyond. But which is better now? I think this is nodding to Teladoc.

First, Teladoc has stronger short-term catalysts, while Facebook has short-term hurdles. In addition, Teladoc shares fell and are potentially better prepared for a rebound.

While Facebook has broader market opportunities with social media and the metaverse, Teladoc is much smaller. I think this gives the virtual healthcare stock more room to work – not just over the next 12 months, but possibly years to come.

This article represents the opinion of an author who may disagree with the “official” recommendation position of Motley Fool’s premium consulting service. We are colorful! Bidding on an investment thesis – even our own – helps us all to be critical about investing and make decisions that help us become smarter, happier, and richer.

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