Investors in some of Australia’s largest and most successful healthcare stocks have seen spectacular returns over the last 12 months. Gains of over 50% have been common and I believe we will continue to see healthcare stocks outperform.
Here are four healthcare stocks set to continue delivering great shareholder returns in the year ahead:
Ramsay Health Care Limited (ASX: RHC) owns and operates private hospitals in a range of major metropolitan and rural communities. Having the biggest and best hospitals in these areas gives Ramsay the majority of business and allows the company to deliver strong margins. Ramsay’s share price is up 40% over the last 12 months but could easily keep rising with the aging population and rise in private health cover.
Sirtex Medical Limited (ASX: SRX) has developed an innovative and successful method for treating liver cancer. Dose sales have increased uninterrupted for the last nine years and are expected to continue growing for years to come. Shares are up 60% over 12 months, but I expect growth forecasts will continue to draw in shareholders.
Vita Life Sciences Limited (ASX: VSC) sells a range of vitamins, supplements and general health products in Asia. The company is set to capitalise on the increasing wealth of the Chinese middle-class, which has seen the company’s share price soar 60% in the last 12 months. Investors are expecting profits to continue growing as in previous years, which should support the share price going forward.
CSL Limited (ASX: CSL) develops products primarily from blood collected from its network of collection centres. Interestingly, the ever-dependable CSL is only up 8% over the past 12 months, when I would have expected it to perform better. This could be because of the high share price ($68), or questions about the company’s move into Japan, but certainly the future prospects are as good as ever. CSL also has a big exposure to the US, and thus should benefit from a lower Australian dollar over time.
Healthcare companies are expected to deliver great returns over the next 10 to 20 years as Australia’s vast baby boomer population moves into older age. Companies like Ramsay that cater for generally well-off patients, are in a perfect position to deliver great returns in the future. The four stocks above have had good runs but should certainly continue to reward investors over the long term.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
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*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie
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