The last 12 months have been reasonably disappointing for the healthcare industry. Although during that time the S&P/ASX 200 Health Care (Index: ^AXHJ) (ASX: XHJ) put on a gain of just under 5%, this was well and truly beaten by the benchmark S&P 200 and its gain of almost 18%.
The good news for investors though is that I believe this underperformance means there are a number of healthcare shares trading at bargain prices. Here are three which have caught my eye:
Australian Pharmaceutical Industries Ltd (ASX: API)
Australian Pharmaceutical Industries is the company behind the Priceline, Soul Pattinson, and Pharmacist Advice brands. I was impressed with the company's performance in FY 2016 which resulted in an 18% jump in net profit after tax to $51.4 million. Thanks largely to the continued success and growth of the Priceline brand, I expect to see a similar result in FY 2017. With its shares changing hands at around 15x estimated FY 2017's earnings according to CommSec, now could be a great time to snap up its shares.
Japara Healthcare Ltd (ASX: JHC)
Last year was certainly a year to forget for Australia's aged care operators. The threat of regulatory changes and mismanagement by rival Estia Health Ltd (ASX: EHE) weighed heavily on their respective share prices. With the worst appearing to be behind them now, I believe Japara is the best buy of the lot. It may not be the cheapest but its quality management team and strong growth plans make it a buy in my eyes. With approximately 473,000 people aged 85 or older in Australia, the company plans to meet the growing demand by delivering over 2,500 new places by 2025.
Monash IVF Group Ltd (ASX: MVF)
The shares of this leading fertility specialist can be picked up for a little over 15x trailing earnings at present. I believe this is great value for a company with solid long-term growth prospects. Although domestic growth has slowed a touch in the first quarter, it still expects half-year profit growth of around 7%. In the long-term I expect the company will find significant growth through acquisitions in fractured international markets. With its shares expected to provide a fully franked 4.9% dividend in the next 12 months, Monash could prove to be a great investment today.
