Due to favourable tailwinds including ageing populations, improvements in treatments, and increased chronic disease burden, I believe the healthcare sector is a great place to consider making long term investments.
Whilst there are a lot of options in the sector right now, three of my favourites are listed below. Here’s why I think they could be in the buy zone:
CSL Limited (ASX: CSL)
I think this biotech giant is arguably the best healthcare share on the Australian share market. In the first half of FY 2019 CSL posted an 11% increase in revenue to US$4,505 million and a 10% lift in net profit after tax to US$1,161 million. A key driver of this growth was its immunoglobulins sales which increased 12% to US$1,708 million. This means they now account for ~38% of total sales. Pleasingly, global demand for immunoglobulins remains strong, which I believe has positioned CSL for a solid second half. And with the company’s influenza business growing strongly and its pipeline filled with a number of lucrative therapies, the future looks very bright for CSL.
Nanosonics Ltd (ASX: NAN)
Another healthcare share to consider buying is this infection control specialist. Nanosonics is the company behind the popular trophon EPR product, which is a best in class disinfection system for ultrasound probes. In the first half of FY 2019 Nanosonics’ installed base increased by 20% on the prior corresponding period to 19,310 units, leading to strong demand for the consumables that it uses. Nanosonics reported a whopping 59% increase in sales associated with consumables and services to $24.3 million. Given the size of the market and management’s plan to launch new products in the near term, I think Nanosonics is well-positioned to continue growing at a strong rate for some time to come.
Pro Medicus Limited (ASX: PME)
Pro Medicus is a healthcare technology company which has also been growing at an impressive rate over the last few years. Pleasingly, this strong form has continued in FY 2019 with the company posting a 59.4% increase in half year revenue to $25.3 million and a 79.9% jump in underlying net profit after tax to $9.2 million. Strong demand for its popular Visage health imaging software in all its key markets drove the impressive result. Due to the quality of its product and its sizeable market opportunity, I remain confident that there will be more of the same in the second half and beyond. This could make Pro Medicus a great buy and hold option.
And here is a small cap healthcare share that has been rated as a buy and tipped for a big future.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and Pro Medicus Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019