4 healthcare stocks that have smashed the market
By Tim McArthur - June 27, 2013
When people get sick, they naturally do everything they can to get better. Established businesses that cater to health issues not only work hard to nurse the sick back to health but they also work hard to build healthy profit margins for shareholders too. You could say it’s a win/win situation!
In the past 12 months the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has increased nearly 17%, which is an incredibly strong result. Beating a market index that has performed so strongly is no easy task for investors, indeed keeping up can be hard enough. Investors who have focussed on the following healthcare stocks, which are not only defensive businesses but also boast above average growth profiles, have massively outperformed the market over the past 12 months.
CSL (ASX: CSL) is a major global supplier of vaccines and blood plasma products. From humble beginnings in Melbourne the company has expanded its facilities into the USA and Europe. The stock price is up 58%, which is an outstanding return for shareholders, however at these levels the stock is priced for expectations of significant future growth which needs to occur to justify the current multiple which CSL trades on.
Primary Health Care’s (ASX: PRY) share price has rocketed 61% over the past year. Its business provides a low cost General Practice (GP) model for doctors and patients as well as pathology services, which appears to be impressing investors.
While Primary Health Care’s business model is focussed on the GP market, Ramsay Health Care (ASX: RHC) has developed a successful business model for operating private hospitals. Ramsay’s success has seen the company expand offshore, with the company now operating over 117 hospitals and day surgery facilities across Australia, UK, France and Indonesia. As the chart below shows, Ramsay’s success has translated into a 60% return for shareholders in the past 12 months.
Finally, breathing device manufacturer Resmed (ASX: RMD) tops the list with a return of over 62% for shareholders. Resmed has established market leading positions for its products. Importantly for shareholders, through innovation, research and development the company continually works to cement and expand market share.
Source: Google Finance
Identifying firms that will outperform is rarely easy. One tool which can sometimes help to ‘sift the wheat from the chaff’ is to focus on firms run by their founders. Primary, Ramsay and Resmed all still have their founders involved; these founders play a significant role in keeping their firms focussed on creating shareholder value.
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Motley Fool contributor Tim McArthur owns shares in Primary Health Care.
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When people get sick, they naturally do everything they can to get better. Established businesses that cater to health issues not only work hard to nurse the sick back to health but they also work hard to build healthy profit margins for shareholders too. You could say it?s a win/win situation!
In the past 12 months the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has increased nearly 17%, which is an incredibly strong result. Beating a market index that has performed so strongly is no easy task for investors, indeed keeping up can be hard enough. Investors who have focussed…