A lot of times when the market nears Christmas you’ll hear talk about a “Santa rally”- a little share price boost before the exchanges close up for the holidays. The S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO) doesn’t look so merry and jovial this time…and rightly so.
The year-long struggle of falling iron ore prices kept the pressure on the market, only later to be joined in chorus with a more than 40% slide in oil prices. The federal budget may have a very big, black hole in it because of these two commodities’ failures.
This is a time when investors may want to look at defensive stocks like healthcare. General demand for health and medical services stay stable whether the market goes up or down.
Also, I would be homing in on those companies that have large parts of business overseas to take advantage of rising currencies vs the Aussie dollar. That can give a stock’s earnings a boost whether Santa shows up or not.
Here are two top-performing healthcare stocks that could keep your portfolio returns in tip-top shape.
Cochlear Limited (ASX: COH) is the market leader for Cochlear implant hearing devices both in Australia and the US. In FY 2014, it released a number of new products which customers and patients were waiting for. Revenue surged in the second half as orders came in. FY 2015 looks like that trend will continue as the company plans to roll out the new products in other countries as regulatory approvals are received. Consensus earnings growth forecasts are for an annual 35% increase over the next two years. This is one of Australia’s best business success stories and a favoured stock to own now.
Ansell Limited (ASX: ANN), the well-known maker of healthcare supplies like plastic, latex gloves and other protective wear, saw both top line and bottom line growth in FY 2014. Its products are in constant use and need regular replenishing, like Gillette razors, so it’s a great business that grows steadily. It, too, has an overwhelming majority of revenue from overseas, so if the Aussie keeps heading for the US 70 cent range, that’s a kicker for company earnings. Both earnings and dividends are expected to have double-digit growth in the next several years. The stock is close to setting new highs and 2015 could see it heading into a higher price range.