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The one sector every growth investor should be looking at is…

retire dollars
Credit: 401(K) 2012

With all of the recent share market volatility, there’s still one sector where investors can find growth.

The sector is of course, aged care and retirement living.

The ABS estimates the number of people aged 65 to 84 will nearly double by 2031. The number of people aged 85 and over more than doubled to 456,500 over the 20 years to 2014-15, and Australians aged 100 years or more number 4,000, nearly triple the previous corresponding period, Australian Bureau of Statistics (ABS) data shows.

Today, I went in search of ASX listed companies that are set to benefit in the aged care and retirement living space. There are two distinct categories, aged care providers, and retirement villages, communities and lifestyle parks.

Aged Care Providers

Japara Healthcare Ltd (ASX: JHC) is a residential aged care operator with 35 aged care facilities and 4 retirement complexes throughout Australia.

This month, Japara announced its purchase of a prime metropolitan site in Newport, Melbourne for $8.3 million. The proposed development will include a new $35 million 120-place aged care facility.

Back in October, Japara announced it had executed contracts for the acquisition of the Profke residential aged care portfolio for a net acquisition price of $79.5 million. The acquisition provides the company with a strategic presence in Queensland and a platform for greenfield expansion.

Estia Health Ltd (ASX: EHE) provides residential aged care services, with a portfolio of 48 facilities and 4,010 operating places (as at 30 June 2015).

In December 2015, the company announced the acquisition of the Kennedy Health Care Group consisting of 8 facilities and 959 operational places; its total operating places will increase to 5,690 by the end of FY2016.

In October, Estia also announced the acquisition of 4 new facilities, three in Adelaide, and one on the Gold Coast which will deliver 256 single rooms by the end of FY16.

Regis Healthcare Ltd (ASX: REG) is a diversified residential aged care provider, with 4,719 operational places across 45 facilities. Regis provides accommodation and care to people who can no longer live independently (either at home or in retirement village accommodation) due to health reasons, but who do not require acute hospital care.

Last year, Regis acquired the Blue Care Redlynch Glenmead Village Aged Care Facility in Cairns and the Darwin Community Care packages business from ECH Inc.

Regis is the biggest of the trio, with a market cap of $1.65 billion, compared to Estia at $1.16 Billion, and Japara at $760 million.

Retirement villages, communities and lifestyle parks

In addition to aged care providers, there are a number of companies that provide affordable prefabricated housing, lifestyle parks, and retirement villages for retirees. Pre-fabricated housing means retirees can buy the house but not the land.

Companies involved in prefabricated housing, lifestyle parks, and retirement villages include Aspen Group (ASX: APZ), Lifestyle Communities Ltd (ASX: LIC), Ingenia Communities Group (ASX: INA), Gateway Lifestyle Group (ASX: GTY), and AVEO Group (ASX: AOG).

Now, here’s a performance review of the eight companies above. As you can see in the table below, with the exception of Aspen and Gateway all companies have had strong performances in the past 12 months

Company Performance 12 months
Estia Health Ltd (ASX: EHE) 28.40%
Japara Healthcare Ltd (ASX: JHC) 29.02%
Regis Healthcare Ltd (ASX: REG) 24.77%
Aveo Group (ASX: AOG) 19.41%
Aspen Group Limited (ASX: APZ) -8.37%
Gateway Lifestyle Group (ASX: GTY) 0.00%
INGENIA STAPLED (ASX: INA) 8.13%
Lifestyle Communities Limited (ASX: LIC) 21.61%

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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*Returns as of February 15th 2021

Motley Fool contributor John Hopkins 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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