Although the valuations of these companies have come back to their averages after the pandemic, they still represent excellent value for investors. The nature of healthcare is changing. Therefore, strict, in-person visits are slowly becoming a thing of the past due to the development of affordable telehealth appointments.
So if you’d like to diversify your portfolio with healthcare companies that have plenty of room to grow, consider buying these top mental health stocks.
Teladoc Health (TDOC)
Teladoc Health (NYSE:TDOC) provides access to licensed therapists and medication evaluations for its users in a virtual environment. It’s widely regarded as the market leader.
I’m mainly bullish on TDOC because whales and institutions have drastically improved their outlook on the company. This is evidenced by activity in the options market, as initially reported by Benzinga.
The analysis of these trades reveals a split sentiment, with 71% bullish and 28% bearish. However, the call options totaled $588,866, while bearish puts totaled $85,295. Therefore, the market is pricing TDOC at an average of $27.5 per share, according to open interest. It trades at $19.03 at the time of writing for a significant potential upside.
Also, the options market reflects the prevailing view of Wall Street analysts, as it’s currently rated a buy with an approximate upside of 23.74% over the next twelve months.
Finally, if the market is correct, TDOC could be a solid business and an excellent short-term momentum play.
Acadia Healthcare Company (ACHC)
Acadia Healthcare Company (NASDAQ:ACHC) provides behavioral healthcare services and other mental health treatments.
The main reason to consider ACHC stock is due to its impressive results last quarter. It beat analyst consensus estimates for its earnings per share at 91 cents. This represented a significant year-over-year (YOY) increase of 13.8%.
Furthermore, total revenues rose by 12.5% compared to the previous year, reaching $750.3 million.
But the real anchor for these results is its growth in operational efficiency. For example, revenue per patient day increased by 6.6%, and patient days rose by 6%. Also, admissions grew by 5.1% YOY, which was higher than projected.
This makes ACHC a solid pick to consider and worthy among this list of mental health stocks.
Compass Pathways (CMPS)
Compass Pathways’ (NASDAQ:CMPS) main focus is developing innovative therapies for mental health conditions. It operates both in the U.S. and the U.K.
It’s working on their psilocybin therapy, COMP360, which is currently in Phase III clinical trials for treating treatment-resistant depression.
Due to its therapies having the potential to drastically change the treatment of some types of severe depression, Wall Street is extremely bullish about CMPS’s prospects. Notably, it carries a strong buy consensus rating. And, its stock price is speculated to soar to 713.11% in the next twelve months.
As a biotech company, CMPS will either succeed or fail spectacularly. The huge predicted upside is not unusual for companies in this industry. Yet, it’s also counterbalanced by the fact that very few drugs make it through the entire FDA clinical trial process. So, if they don’t, they could find themselves back at square one. At that point, investors may have nothing to show for it.
Still, it may be worthwhile to open a small position in CMPS due to the market’s unwavering optimism as an informed risk.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.