It certainly has been a great start to the year for the S&P/ASX 200 Health Care (Index: ^AXHJ) (ASX: XHJ). Year-to-date the healthcare index has smashed the market with a whopping 15% gain.
Despite this huge gain I still feel there are a number of healthcare shares which could climb significantly higher over the next 12 months. Here they are:
The Japara Healthcare Ltd (ASX: JHC) share price has fallen 30% in the last 12 months due largely to funding concerns in the aged care sector. This has left the leading aged care operator's shares changing hands at just over 14x trailing earnings and at a level which I believe provides investors with a good risk/reward. As Australia's population ages, demand for care is expected to rise strongly. Japara aims to meet this demand with the addition of over 1,100 new greenfield places by FY 2020. This will be an increase of approximately 29% on its current places.
The Monash IVF Group Ltd (ASX: MVF) share price is down 20% since the start of October due to the impact of increased competition. Although competition has heated up in the fertility treatment industry, I think Australia's second-largest IVF provider will bounce back thanks to the strong underlying demand fundamentals for IVF and women's imaging services. At just over 15x trailing earnings and providing a trailing fully franked 4.1% dividend, Monash IVF could be worth revisiting in my opinion.
The Ramsay Health Care Limited (ASX: RHC) share price may have jumped 11% in the last 12 months, but I still see significant gains ahead for the private hospital operator. Due to ageing populations across the world, increased chronic disease burden, and improvement in treatments, I think Ramsay is in a great position to grow organically over the next decade. The company also has the potential to grow inorganically through acquisitions and expansions. While 29x trailing earnings may sound expensive, I think its long-term growth prospects more than justify the premium.
