In many ways the old fable of the tortoise and the hare holds true for investing – slow and steady can win the race. In other words, given the benefits a lifetime of compounding can bring, investing is best practiced as a long-term pursuit with an eye on the distant prize.
The healthcare sector has proven itself to be a good place to search for high quality, growing businesses. There are a number of reasons this sector has proved fruitful but the fact is that as per capita income rises, so too does demand for medical services and the tailwind of an aging population are major factors.
Ramsay Health Care Limited (ASX: RHC) owns and operates private hospitals throughout Australia as well as having an increasing number of assets in Europe and Asia. Whether it involves a child being born, surgery during middle age, or caring for an elderly patient, Ramsay is able to provide services at all stage of the life cycle. Its acquisitive nature and the long-term trend from public to private provision of services gives this company a long-term growth trajectory.
Like Ramsay, CSL Limited (ASX: CSL) offers services to customers at all stages of life including the provision of vaccines and other lifesaving therapies. Thanks to an enormous research and development budget, not only can CSL grow sales due to rising global per capita income but it can also grow through the development of new and novel treatments.
Recently floated Lifehealthcare Group Ltd (ASX: LHC) is a distributor of a large array of medical devices to surgeons, hospitals and other medical specialists. Its products are critical components for the provision of health care and include implantable devices and prostheses as well as equipment such as ultrasound machines. It should also benefit from the tailwind of increased spending on health services.
While not technically a health care sector stock, undoubtedly InvoCare Limited (ASX: IVC) is health (or perhaps that should be lack of health) related. Invocare is the largest provider of funeral services in Australia and also has operations in New Zealand and Singapore. Sad as it may be, its services are an undeniable part of getting old. The company is very well managed and has a great track record of creating shareholder value.
Identifying quality, growth stocks that you can buy and hold for the long-term is really what investing should be about. Adapting a buy-and-hold approach coupled with the patience to wait for an attractive purchase price can allow investors by buy stocks they own for a lifetime.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
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