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Ramsay Health Care Limited, Amcor Limited, Navitas Limited: Are their rivals better investments?

The flood of initial public offerings (IPOs) over the past 18 months has created a number of new and exciting investment opportunities for investors.

Here are three well known and widely owned stocks which are indeed great businesses but their newly listed competitors could currently make for better investment options…

Ramsay Health Care Limited (ASX: RHC) is a leading owner and operator of private hospitals both in Australia and overseas. Over the past decade the group has produced a total shareholder return (TSR) of 26.5% per annum – that’s outstanding but as we all know it’s the future which counts. On that score, Ramsay’s newly listed, smaller rival Healthscope Ltd (ASX: HSO) could be a better bet. They are both trading on similar yields and similar price-to-earnings (PE) ratios but Healthscope’s smaller market capitalisation could make it more nimble and position it for faster growth.

Amcor Limited (ASX: AMC) is the leading listed packaging group on the ASX with a massive global footprint. Amcor’s TSR over the last decade has been 10.9% which is significantly lower than Ramsay’s, but still respectable. The newly listed Pact Group Holdings Ltd (ASX: PGH) also operates within the packaging sector but with a forecast PE and yield of 13.1x and  2.5% respectively the stock could be a better bet than Amcor’s forecast PE of 18x and yield of 3.9%.

Navitas Limited (ASX: NVT) has been an Australian success story within the global private education industry with a TSR of 10.8% over the past five years. Vocation Ltd (ASX: VET) is a smaller, domestically focussed education and training services company that trades on a similar yield of around 5% but at a lower PE multiple that Navitas. It’s also notable that while Vocation doesn’t have the same level of global growth options, analyst consensus is forecasting a higher earnings growth rate for Vocation.

Think outside the square

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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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