Healthcare has been one of the best performing sectors over the last five years. Yet, due to its nature, it’s also one of the best defensive sectors too. This is a powerful combination and healthcare could have another good five years.
Thanks to the ageing population and people’s willingness to spend to improve their health, the below three companies could continue growing nicely:
Cochlear Limited (ASX: COH)
Cochlear provides hearing implants for children and adults. Pleasingly, it’s increasing the percentage of its revenue that’s recurring and this will make Cochlear’s earnings more consistent for shareholders.
It generates a lot of sales from overseas which has advantages and disadvantages with currency effects.
Customers’ lives are truly changed when they use Cochlear’s products and will hopefully be willing to keep paying for it.
Cochlear is currently trading at 35x FY17’s estimated earnings with a grossed-up dividend yield of 2.66%.
ResMed Inc. (CHESS) (ASX: RMD)
Resmed’s focus is about the monitoring and treatment of sleep apnoea. Many people aren’t aware that they suffer from sleep apnoea so the company has a smart strategy of trying to raise awareness of the issue with potential patients.
Owning ResMed shares is also a good way of gaining exposure to any strengthening of the US dollar, which may happen thanks to the rising US interest rate.
ResMed is trading at 24x FY17’s estimated earnings with an unfranked dividend yield of 1.28%.
Paragon Care Ltd. (ASX: PGC)
Paragon Care is one of Australia’s leading providers of medical equipment and consumable products to the health and aged care sectors.
It distributes a wide and growing variety of items, with Paragon adding bolt-on acquisitions to its business all the time. This helps them achieve scale efficiencies and better relationships with more healthcare facilities.
Paragon is trading at 13x FY17’s estimated earnings with a grossed-up dividend yield of 4.46%.
At the current prices, I think my order of preference would be Paragon, then Resmed and finally Cochlear. In my opinion, all three should provide good growth over the years ahead. If healthcare stocks aren’t your thing, then these three fast-growing stocks could be exactly what you’re after.
These 3 stocks could be the next big movers in 2020
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.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
Motley Fool contributor Tristan Harrison 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.