Healthcare stocks are at a good point right now, especially the three stocks below which have a large part of their business overseas. Why’s that?
The reason is with the low Aussie dollar, their earnings from countries like the US will be expanded because of the currency exchange shift.
Now the Aussie dollar is weaker around US 87 – 88 cents, but some forecasts are calling for it to head even further down to around US 80 cents.
These three companies are already looking forward to solid earnings growth and the currency movement is the kicker to boost potential profits even more.
Sirtex Medical Limited (ASX: SRX) is up 41% in the last six months as it is waiting for clinical trials on its specialised liver cancer treatment to conclude. If the results for its SIR-Spheres targeted cancer fighting product are positive, it might become a “first line” treatment alongside regular chemotherapy and radiation. Dose production is anticipated to triple in volume as a result.
The earnings growth potential is great, yet you have to pay a premium for the stock currently. I would keep this one on the watchlist and hold off on buying until more of the market hype comes out of the high price.
Cochlear Limited (ASX: COH) is the hearing aid and bionic ear device maker. It holds about 60% of the Cochlear implant market in the US and a number of new product releases on the market are driving orders and revenues. The stock has climbed around 20% since February on the expectation that earnings will be higher than in FY 2014, due to the demand for its hi-tech products.
Azure Healthcare Ltd (ASX: AZV) is an $82 million provider of healthcare communications and clinical workflow management solutions. It operates in six countries and supports 8,500 healthcare facilities. About 30% of its revenue comes from the US and 55% from ANZ. It may be a small company, but net profit went from $1 million to $3.9 million in FY 2014. It has set up a new production plant in the US to meet the strong growth there. In the past six months, the stock rose almost 39% and currently has a 21 price-earnings ratio. It may be early days, but you should at least have this one on your radar.
Specialised medical products and technologies can be great earners because of the constant and high volume demand for healthcare solutions. Similarly, tech stocks also are a good way to round out your portfolio and make sure you have solid growth.
Disruptive technologies especially have that potential to shake up established markets, like a Google or Apple, and make new winners as the playing field changes.
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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.