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Why the Japara Healthcare Ltd share price surged 8% higher today

The Japara Healthcare Ltd (ASX: JHC) share price has been a big mover on the market today.

At the time of writing the aged care provider’s shares are up 8% to $2.01.

Why have its shares surged higher?

Investors have been fighting to get hold of shares today after Moelis Australia Ltd (ASX: MOE) acquired a 9.96% stake in the company for $50.4 million.

Moelis has taken this step as it believes the aged sector is an attractive area to invest in and that Japara is a standout option due to its quality assets and its outstanding management, governance, and provision of resident care.

The market clearly agrees with this view judging by the Moelis share price reaction today. The fund manager’s shares are up almost 6% to $5.92, bringing their six-month return to almost 90%.

Is it too late to invest in Japara?

I don’t believe for a second that it is too late to invest in Japara. Even after today’s gain its shares are changing hands at under 18x trailing earnings and provide a trailing fully franked 5.6% dividend.

As I said yesterday, thanks to its plan to increase capacity significantly over the next few years, I think Japara is in a strong position to grow its earnings at a solid rate in the long-term.

And while earnings are expected to be relatively flat in FY 2018, I feel the company will reap the rewards of its investments in FY 2019 and onwards.

For this reason it is my preferred pick in the industry ahead of Regis Healthcare Ltd (ASX: REG) and Estia Health Ltd (ASX: EHE).

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Motley Fool contributor James Mickleboro has no position in any of the 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.