3 healthcare shares I think are in the buy zone right now

In the last five years the healthcare sector has been one of the stand out performers on the Australian market. During that time the S&P/ASX 200 Health Care (Index: ^AXHO) (ASX: XHO) has gained a massive 152% compared to the market’s 30% return.

It’s been a bit of a slow year this year though, with the sector down about 1% year to date. But the good news is that I see a lot of value in healthcare shares now, which could mean a return to form in 2017.

Here are three shares which I think are in the buy zone:

Cochlear Limited (ASX: COH)

In the last three months the shares of this leading implantable hearing solutions provider have fallen almost 15%. Although at 30x estimated full year earnings it still isn’t cheap, Cochlear traditionally trades in or around this level. I believe this makes it an opportune time to make a buy-and-hold investment, especially with the U.S. dollar strengthening. Last year Cochlear reported sales in the Americas of $519.7 million, equating to approximately 45% of total company sales.

Japara Healthcare Ltd (ASX: JHC)

Aged care has been a real headache for investors in recent times, but I believe there are signs that Japara has turned a corner now. At its recent annual general meeting managing director and CEO Andrew Sudholz was optimistic on the company’s future and reiterated his guidance of an 11% increase in EBITDA in FY 2017. Looking further ahead I feel the company has a huge market opportunity. With approximately 473,000 people aged 85 or older in Australia, the company plans to meet the growing demand for aged care services by building and operating more than 2,500 beds by 2025.

Monash IVF Group Ltd (ASX: MVF)

The shares of this leading IVF specialist have been crushed in the last few weeks after a rival clinic advised that it had experienced weakness in the industry during the last quarter. As a result its shares are now down 22% in the last three months. But Monash IVF has a habit of growing above the industry-average rate and stealing market share from its competitors, so this sell off could prove to be a fantastic buying opportunity. With Monash IVF holding its AGM tomorrow, investors won’t have long to wait for an update on its trading.

Finally, if you're looking for more investment ideas then the smart money is on these hot stocks next year. Is yours?

Big, Fat, Dividends

This company's dividend is almost the stuff of legends. Its reliable cash flows support a high payout ratio, and the company's stash of franking credits are the cherry on the top of the dividend cake. Based on the last 12-months of dividends, shares are offering a fully-franked 6.5% yield, which grosses up to a whopping 9.3%, when those franking credits are included.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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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