Should you buy these 3 healthcare shares for the long term?

Australian healthcare shares have long been popular with investors, with their perceived defensive characteristics and growing demand over the long term. Many Australian healthcare businesses have done very well for shareholders over the long term.

Here’s my take on whether these 3 are an opportunity today:

CSL Limited (ASX: CSL)

CSL is a blood product developer that has an astounding track record ever since listing in the 1990s. A combination life-changing products, continuous research & development (R&D) spending, and share buybacks have led to big improvements in earnings per share for shareholders. The company’s future continues to look quite bright thanks to continued access to low-cost credit and an extensive R&D pipeline.

The downside is that CSL is priced accordingly at more than 30 times earnings, and its highest share price ever. This is the type of business that can be held for the very long term in my opinion, but I’d prefer to get it a bit cheaper.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

Fisher-Paykel is a medical device developer and manufacturer that competes with ResMed Inc. (CHESS) (ASX: RMD) in the obstructive sleep apnoea (OSA) market. The company has grown earnings and profits rapidly over the past few years, and has new products in the works that should improve both sales and patient outcomes. The portfolio of unique products (although this is partly in dispute, see below) and high spending on R&D should help the company grow profits at above-average rates over the long term.

I would consider buying shares of Fisher Paykel today, but the company has a patent dispute with ResMed which adds some uncertainty to the investment case.

Virtus Health Ltd (ASX: VRT)

Virtus Health is a fertility business that operates clinics across Australia, Ireland, and Singapore. With demand for fertility services growing across Australia, the company would appear to be in a sweet spot of high patient demand and a growing industry. Unfortunately, competition has been impacting the business recently and a downturn in activity has led to sharply lower sales and profits. This suggests a lack of competitive edge, which should discourage long-term shareholders.

Although Virtus is not an obvious winner,  it’s also not priced in the same way as most other Australian healthcare companies, and as such could be worth a closer look.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Sean O'Neill 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.