3 of the best healthcare shares for 2016

Credit: PerformanceHealth

While many bank, resource and energy stocks took a hammering in 2015 with a swath of leading companies from these three sectors all underperforming the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), one sector which managed to buck the trend was healthcare.

The mix of an aging population, global opportunities and a government searching for a way to transition the Australian economy past the mining boom bodes well for the healthcare sector to put in another credible performance in 2016.

For the year ahead, here are three stocks which you may wish to keep an eye on…

CSL Limited (ASX: CSL) is Australia’s leading biopharmaceutical company with a market capitalisation approaching $50 billion. The stock boasts an average annual total shareholder return (TSR) over the past decade of 24.4%.

With one analyst consensus forecasting earnings per share to increase to 474 cents in financial year (FY) 2017, the stock arguably still looks appealing today despite its share price being over $100!

Ramsay Health Care Limited (ASX: RHC) is a $14 billion global hospital group with hospitals and day surgeries spanning Australia, the UK, Europe and Asia.

Despite the group’s size, one analyst consensus still expects earnings per share (EPS) to grow at a solid clip with EPS rising to 268 cents per share (cps) in FY 2017. With a TSR of 24.7% per annum over the past decade, Ramsay remains a company with exciting future prospects.

Sonic Healthcare Limited (ASX: SHL) has a market capitalisation of around $7 billion and is not only one of Australia’s largest medical diagnostic companies, but it also has a significant presence in overseas markets including the USA and Germany.

Although the TSR of Sonic is less impressive at just 6% per annum over the past 10 years, forecast growth suggests EPS will reach 117 cps in FY 2017. With the stock trading near a 52-week low and given the long-term tailwinds for the global healthcare sector, Sonic remains another stock to watch.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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