5 health stocks for a healthy portfolio

The health sector is a great place to search for high-quality growth companies.

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For classification purposes, the healthcare sector is divided into two industry groups:

1)      Healthcare Equipment & Services

2)      Pharmaceuticals, Biotechnology & Life Sciences

The pharma, biotech and life sciences sector is known for its success stories – CSL Limited (ASX: CSL) and Sirtex Medical Limited (ASX: SRX) are prime examples. CSL has expanded from a small domestic government-owned entity into a global powerhouse. Its share price has followed suit, rising by over 1000% in the past decade. Meanwhile Sirtex has successfully developed and marketed a treatment for liver cancer which has led to the share price gaining 280% in the last 10 years.

While the health equipment and services sector may not be considered quite as glamorous, it too is home to some outstanding success stories and many appealing investment opportunities.

Quality

Ansell Limited (ASX: ANN) provides health and safety protection solutions including gloves and condoms. Its global expansion has allowed the company to grow its revenues every year for a decade; in turn earnings per share (EPS) have increased from 39.9 cents per share (cps) to 104.2 cps.

Sonic Healthcare Limited (ASX: SHL) has expanded its medical diagnostic services from Australia to New Zealand, USA, UK and Europe. Like Ansell, Sonic has an impressive record of growing its revenues over the last 10 years; likewise Sonic's EPS have grown from 21.4 cps to 84.3 cps.

Growth

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) and ResMed Inc (ASX: RMD) both provide breathing solutions for respiratory care, acute care and obstructive sleep apnea (OSA). The increased recognition and diagnosis of OSA has created a large target market for both companies which should drive sales and earnings over the coming years.

Small cap

Pulse Health Limited (ASX: PHG) is arguably a tiny, regional version of Ramsay Health Care Limited (ASX: RHC). Pulse operates private hospitals, day surgeries and community home care in NSW and Queensland. While Pulse is still a small company and not without its risks, Ramsay has proven that when done well, the private hospital business model can certainly be a profitable one.

Foolish takeaway

If you're trying to catch fish, then it helps to be fishing in a pond with fish! By the same token if you're looking to own high-quality growth stocks, the healthcare sector is a great place to search.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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