2 healthcare shares I like for their long-term growth potential

Investing for the long-term has always produced the best results on average when compared to short-term investing. This means that usually the best approach is to identify businesses that have a lot of growth potential for many years ahead.

Here are two stocks that could grow for a number of years:

Japara Healthcare Ltd (ASX: JHC)

Japara is one of the largest aged care providers in Australia with a market capitalisation of $500 million.

It had 43 facilities with 3,840 operational places at 31 December 2016. It is expecting to bring online at least 1,000 additional net new beds by FY20.

It is predicted that there will need to be an additional 76,000 beds created over the next decade according to the annual report on the funding and financing of the aged care sector. The report was done by the Aged Care Financing Authority.

Japara would hopefully get a nice percentage of those new beds as one of the largest aged care operators.

Management will need to be wary of the Government changing policy on funding because Japara relies heavily on money provided by the government.

Japara is trading at 17x FY16’s earnings with a grossed-up dividend yield of 8.65%.

National Veterinary Care Ltd (ASX: NVL)

National Veterinary Care is a veterinary clinic business that was only listed in August 2015. In that time the share price has grown by 102% from $1.21 to $2.45, which is a rapid rise.

It has achieved this strong share price growth by growing its number of owned clinics to 54.

The pet industry is steadily getting bigger thanks to the rising pet population, which is growing with the human population.

National Veterinary Care is different to Greencross Limited (ASX: GXL) in that it is only going to focus on veterinary clinics whereas Greencross also has pet retail stores with its Petbarn network.

National Veterinary Care is currently trading at around 24x FY17’s estimated earnings. It doesn’t yet pay a dividend but is expected to in its next half-yearly results.

Foolish takeaway

I think both of these businesses are worth an investment at the current prices. Japara is at better value, but I think National Veterinary Care will provide the better returns over the next three years.

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Motley Fool contributor Tristan Harrison owns shares of Greencross Limited, JAPARA DEF SET, and NATVETCARE FPO. 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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