5 Telehealth Stocks for Long-Term Financial Fitness

Telehealth stocks are cooling off after blazing higher for most of 2020. But digital health services aren't going anywhere - good news for these five picks.

A person holding a phone during a telehealth meeting
(Image credit: Getty Images)

There are no silver linings to the pandemic. Nevertheless, some stocks and sectors have benefited greatly from the societal changes COVID-19 has wrought. One such success story can be found in the nascent telehealth industry.

Companies that deliver virtual medical appointments, healthcare, healthcare diagnostics and the artificial intelligence and cloud-based services underpinning it all are having a fine 2020. Indeed, most telehealth stocks connecting patients to physicians, insurers, hospitals and health systems have been winners.

And demand is only going up.

According to management consultant McKinsey, 46% of U.S. consumers in April were using telehealth to replace canceled healthcare visits. And the market is only expected to get bigger – much bigger. "The telehealth market by revenue is expected to grow at a CAGR of over 28% during the period 2019-2025," according to ResearchAndMarkets forecasts.

One hurdle for investors to overcome is that when it comes to pure-play telehealth stocks, the pickings are somewhat slim. To that end, we've sorted through the comparatively small telehealth sector to find some of analysts' favorite pure plays.

S&P Global Market Intelligence surveys analysts' stock ratings and scores them on a five-point scale, where 1.0 equals Strong Buy and 5.0 means Strong Sell. Any score of 2.5 or lower means that analysts, on average, rate the stock a Buy. The closer the score gets to 1.0, the stronger the Buy call.

After taking into account analysts' scores, equity research and company fundamentals, we've homed in on five of the best telehealth stocks to play the industry's explosive growth. Just note that many of these stocks are starting to cool off after red-hot 2020 runs. In a few cases, analysts are suggesting you put these stocks on a wish list and wait until additional dips before buying.

Data is as of Nov. 10.

Dan Burrows
Contributing Writer, Kiplinger.com