As the Aussie dollar slips more, investors' attention is turning to companies that have overseas operations which can get a boost in earnings from a high US dollar. Among the many, there are two, Ramsay Health Care Limited (ASX; RHC) and REA Group Limited (ASX: REA), that I think have attractive growth prospects.
— Ramsay Health Care Limited
Already the company is the number one private hospital operator in Australia with the largest market share among private healthcare providers. Also, it has been on an acquisition path for a number of years. It now has hospitals and medical facilities in France, the UK, Malaysia and Indonesia. Its next plans are to grow in Asia with its large population countries and steadily rising average ages. The healthcare demand there can be a great source of business growth.
It pays a 1.8% yield and is selling at 29 times earnings. That's the very top of its past PE range. It has come down in price a little to about $50 a share. Although a 29 PE may seem high, analysts are forecasting that it could increase earnings around 17% annually over the next two years. I believe that is reasonable, but if you want to wait for a better entry point, a pullback to $45 – $48 range could satisfy.
— REA Group Limited
The online property search website realestate.com.au surprised many investors with the news that it will acquire US-based Move Inc. (NASDAQ:MOVE) together with Rupert Murdoch's News Corporation (NASDAQ:NWS). News Corporation is REA Group's largest shareholder. REA Group will take a 20% stake in Move Inc. for about US$200 million.
Although it is Australia's biggest property search website, this is its first major move into the much bigger US market. Move Inc. operates property websites such as Realtor.com and is the third largest U.S. property search website. Move holds about 2% of the annual US$14 billion online advertising market. It also has property related service websites like home removals that reach about 35 million people monthly.
I like this story because if you thought REA Group may not have much more room to grow in Australia, this acquisition opens up a whole new avenue of growth.
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