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This week’s top two healthcare buys: ResMed Inc and Global Health Limited

Two quality healthcare companies that have caught my eye this week are ResMed Inc (ASX: RMD) and Global Health Limited (ASX: GLH).

Shares in mask and breathing device maker ResMed Inc have had a hard time this year and are down 17% in the last six months. This has taken some of the shine off the shares and brings them down to a much more appealing buying price.

One reason ResMed shares have been falling is because of slowing sales in the U.S which have spooked investors since the company made the announcement at its half year result in February. However ResMed remains globally diversified and is still recording growth in a number of its other markets.

Another reason for the fall could be the growth witnessed by new, low-tech competitor Somnomed Limited (ASX: SOM). Somnomed provide a mouth-guard type adjuster called SomnoDent to open a patient’s airway and prevent obstructive sleep apnea. Over the same period that ResMed’s shares have been falling, Somnomed’s shares have rocketed 32% supported by a 39% growth in sales.

However the market for sleep apnea solutions is huge, with 10% of 30-70-year-olds suffering from sleep apnea in a moderate to severe form according to ResMed. ResMed also has a thriving masks business which have various additional healthcare uses and make up 46% of total sales.

Global Health Limited (ASX: GLH) is a smaller company with significant growth potential. The company offers cloud-based software services for hospital operators. Global Health announced an outstanding half-year result with revenue up 22% and NPAT up 38% which drove shares up strongly.

However investor enthusiasm has calmed down in the last five trading days and shares have fallen 9% to $0.71. Global Health has the ingredients to become a big growth story in the next few years, combining two of the biggest growth trends around: cloud computing and healthcare spending.

Foolish takeaway

Healthcare stocks are likely to remain among the top growth companies over the next five years due to a favourable cocktail of demographic factors. The recent fall in share price for ResMed and Global Health make them two of the top companies to consider adding to your portfolio this week.

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Motley Fool contributor Regan Pearson owns shares in Global Health Limited.

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