The Reserve Bank of Australia looks like it will be forced to cut interest rates again soon to counter the domestic and Chinese economic data, which is pointing toward a slowing Australian economy. When investors are faced with these kinds of economic headwinds one way to try and outperform is to identify themes within the economy which have the potential to still grow.
One such theme is Australia's aging population. Whether unemployment goes up or down, whether China is growing at 7% of 5%, Australia's population will continue to age and demand an increasing level of certain goods and services.
Below are three firms which are well placed to prosper from an aging population and which investors may wish to consider adding to their watch lists.
Admittedly there are plenty of young people who find they require a hospital for a multitude of reasons however there is still undoubtedly a skew toward an aging population and increasing demand for hospital services. Ramsay Health Care (ASX: RHC) is Australia's leading privately owned hospital operator, owning and operating around 120 hospitals and day surgeries across Australia as well as in the UK, France, Indonesia and most recently, Malaysia. Ramsay's significant market share makes the company well placed to supply more services to the increasing demands of the elderly.
An aging population means more Australians looking to downsize the family home, whether just as a lifestyle choice or to access capital tied up in the property. Many older citizens also wish to join a friendly community both from a social and support perspective and that's where retirement villages can become an attractive option. One company looking to capitalise on this growing trend is Ingenia Communities (ASX: INA). Ingenia has been busy expanding its portfolio of retirement villages around the country, recently this included the purchase of a 50-unit rental village near Ballarat, Victoria.
Vision Eye Institute (ASX: VEI) provides ophthalmic services in Queensland, NSW and Victoria. Opthalmic services cover a range of critical eye issues including cataract, retinal problems such as macular degeneration, glaucoma and vision correction. The company which incorporates 18 consulting facilities, eight day surgeries and seven refractive and laser eye surgeries originally grew through a debt-fuelled acquisition strategy which ultimately saw the share price sink on concerns the company would not survive under its mountain of debt. Under current CEO Brett Coverdale the business has now been steadied and set on a path of organic growth. With nearly a third of older Australia's suffering from cataracts plus other vision correction needs, the long-term outlook for treatments provided by Vision Eye Institute looks significant.
Foolish takeaway
Identifying profitable investment themes can be tricky; even after this is done successfully it is only half of the journey. Investors still need to analyse and identify individual companies within the theme which offer a sound risk-reward investment proposition.
Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."
More reading
- Think Woolies and Wesfarmers are overvalued? Try these instead
- CSL's new CEO confirms focus on growth
Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
