Could Cochlear Limited (ASX: COH), ResMed Inc. (CHESS) (ASX: RMD), Pro Medicus Limited (ASX: PME), Nanosonics Ltd. (ASX: NAN) and Paragon Care Ltd. (ASX: PGC) shares take your portfolio to the next level in 2017?
Over the past five years, it may be surprising to note that the leading Australian share market index, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), has drastically underperformed the S&P/ASX 200 Health Care (ASX: XHJ) (Index: ^AXHJ) index. Some of Australia’s largest health care companies are CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC).
Healthcare V. ASX 200
The chart above shows the Australian healthcare sector versus the ASX 200 over five years. However, over almost every time period assessed, the health care index outperforms the ASX 200. Over the past 15 years, for example, the healthcare index has returned 345% while the ASX 200 is up 71%. That’s a big difference.
Why health care?
Health care companies have many appealing features. Indeed, we all need doctors, medicines and the associated services. And when it comes to health, people rarely skimp on the best products and services for themselves or their loved ones.
However, looking closely at Australia’s health care index, it is clear to see why it has performed so well. With Ramsay, ResMed, Sonic Healthcare Limited (ASX: SHL) and Cochlear included in the index, it would seem obvious why the sector has outperformed — each of these companies is up more than 120% before dividends over the past five years.
Looking ahead, I have my eyes on shares of these five ASX healthcare companies:
- Cochlear: Cochlear is the global leader in implantable hearing aids and associated devices. In the market for more than 30 years, Cochlear has a proud history of bringing hearing to thousands of people worldwide.
- ResMed: ResMed is a global leader in devices to treat respiratory conditions, like sleep apnea. The $13 billion company has its shares listed on both the ASX and New York Stock Exchange.
- Pro Medicus: Melbourne-based Pro Medicus has developed technology that enables doctors and radiologists to inspect and manipulate medical imagery, like X-rays, from their smartphone.
- Nanosonics: The $920 million Nanosonics is experiencing strong growth in sales of its Trophon EPR system, a device used to disinfect ultrasound probes in seven minutes to the highest standards.
- Paragon Care: This tiny company is a distributor of medical devices throughout Australia. While more risky than the other shares on this list, Paragon could be a worthy contender for a higher-risk investment over the next five years.
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The Motley Fool Australia owns shares of Nanosonics Limited. 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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