Telemedicine Canadian stock which is better WELL OR TELUS ?

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In a recent conference call Portfolio Manager Noah Blackstien ( Fund manager ( 22.4 years) for Dynamic Power American Growth Fund ) Stated that 2021 would be a year of consolidation in the telemedicine industry in the USA. Both these companies are better established than the other Telemedicine Canadian companies and have made strides to expand in the USA. If 2021 is anything similar to 2020 there will be huge growth opportunities in these 2 stocks As the fund manager indicated the growth in this area has been brought about du to the coronavirus and the present situation of this spread in the USA.

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Asked on December 27, 2020 7:45 am
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Hi Pina,

Both are very different companies. While Telus is very much in the telehealth space, it is still primarily a telecom company. As one of the big three, it forms an oligopoly with Rogers and BCE in this landscape. It is a Blue Chip company, a reliable dividend payer and one that is expected to grow by mid to high single digits.

WELL is a healthcare pureplay. It owns and operates a series of clinics, and has a suite of virtual health platforms. It does not pay a dividend, is not yet profitable but is expected to growth at a much faster pace than Telus. This is not all that surprising as Telus' sheer size makes it difficult to post meaningful growth numbers.

They are two very different investments and each carry very different risk profiles. WELL is the better option if you are comfortable taking on additional risk for the potential of higher growth. Telus is better if you are more of a defensive investor, prefer dividend stocks and are comfortable accepting a lower growth profile.

I do agree that consolidation is coming - it has already begun. Teladoc and Livongo in the states have merged and WELL has been very actively engaged in making acquisitions. The problem with Telus, its healthcare segment gets buried and if it truly wants to unlock value, it may have to spinout its healthcare business (which it has alluded to). Given its size and access to capital however, Telus is best positioned to make the bigger M&A splash if it decides to go all-in on telehealth.

Mat

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Posted by Mathieu Litalien
Answered on December 27, 2020 8:34 am