Healthcare stocks are likely to remain among the top growth companies over the next five years due to a favourable cocktail of demographic factors. Ageing populations, bulging middle classes in China and South-East Asia and growing populations will all drive increased spending on health related products and services.
And if this reporting season is anything to go by, the growth in the healthcare sector has already started flowing through thick and fast.
Healthcare and animal care distributor EBOS Group Ltd. (ASX: EBO) only listed on the ASX last year, but is already making a big impression, beating prospective forecasts and growing net profit after tax (NPAT) by 229%.
The company categorises itself as a growth company and is targeting both long-term organic growth and acquisitions. Ebos is currently looking at a number of acquisitions and is also in negotiations with the NZ government to set up a national supply chain for medical devices and consumables.
With a share price of $8 Ebos is trading at a trailing (2013) price-to-earnings ratio of around 16. This could turn out to be a long-term bargain.
Mask and breathing device maker ResMed Inc (ASX: RMD) is another quality company which continues to see sustained growth. For the second quarter of the 2014 financial year ResMed grew earnings per share by 13% and had a gross margin of 64.7%.
The company’s compounded annual growth rate over the last five years has been an incredible 13% and although this may start to slow the company still has positive demographics to help propel future growth.
Global Health Limited (ASX: GLH) is a smaller company with significant growth potential. The company offers cloud-based software services for hospital operators and was identified by fellow Fool Owen Raskiewicz as his top pick for January this year. Since then shares have rocketed 62% on a great half-year result with revenue up 22% and NPAT up 38%.
The healthcare industry has got off to a cracking start in 2014. Many of these companies cover a diverse range of businesses and are likely to continue to reap the rewards of changing demographics in the years to come, they should be considered part of your long-term growth portfolio.