Investors are often attracted to healthcare companies, and it's not hard to see why. The sector has strong tailwinds such as ageing and increasingly obese populations, plus healthcare seems like one of the last expenses we'd cut in a downturn.
Here are 3 healthcare businesses I really like:
CSL Limited (ASX: CSL)
CSL collects blood plasma from donors and synthesises it into a variety of products for haemophiliacs and people with other disorders. It's essentially a combination of manufacturer and researcher, although it recently acquired an influenza vaccine business which is becoming increasingly meaningful for earnings. CSL has a strong pipeline of new treatments coming through and has a great track record at growing value for shareholders.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
Fisher & Paykel is a true manufacturer, and designs and makes its own brands of oxygen masks and other devices for respiratory care and obstructive sleep apnea. It operates in a competitive segment but still manages to achieve top notch returns on its investments, and invests heavily in research & development while also maintaining a debt-free balance sheet.
The company is currently involved in a lawsuit against ResMed Inc. (CHESS) (ASX: RMD) with both companies accusing the other of patent infringement.
Pro Medicus Limited (ASX: PME)
Pro Medicus is a software provider that provides imaging and diagnostic functions plus ancillary services to hospitals in Australia, Europe, and North America. While the company's shares have soared in recent times, it is still a relative minnow given the markets that it operates in, and could have plenty of growth potential ahead.
While I think all 3 of the above companies are likely market-beaters over the long term, the primary reason I haven't purchased any of them yet is valuation. All appear pricey, and it's tough to get a good estimate of future valuation, especially with the uncertainty over some things like Fisher & Paykel's lawsuit.
