The small cap space is the most exciting to me because it’s much easier for a $100 million company to double in value compared to a $1 billion company.
Healthcare is a good industry because everyone values it and a lot of the ASX healthcare shares have regular income.
Paragon Care Ltd (ASX: PGC)
Demand for healthcare products is only going to grow with population growth and ageing demographics.
Paragon is a provider of various medical equipment, devices and consumables like hospital beds, lighting and carts. Its main two customer types are hospitals and aged care operators.
It has successfully used an acquisition strategy to grow its business and add more to its offering. There are two benefits to this, it can use its existing sales network to sell more items to the same customer. A new acquisition may also open up a new hospital that it can sell its entire range to.
Paragon is currently trading at 12x FY18’s estimated earnings with a grossed-up dividend yield of 5.13%.
National Veterinary Care Ltd (ASX: NVL)
National Vet Care is the second largest veterinary group in Australia and New Zealand.
It hasn’t been listed on the ASX for long, but it has already delivered impressive results which has helped grow the share price from $1.21 to today’s $2.60.
National Vet Care is steadily adding more clinics to its total and also increasing its profit margins, which should accelerate growth over the next couple of years. Management are predicting that statutory revenue will grow by about 25% in FY18.
National Vet Care is currently trading at 31x FY17’s earnings with a grossed-up dividend yield of 1.65%.
Monash IVF Group Ltd (ASX: MVF)
Monash IVF is one of the largest IVF providers in Australia. It’s gone through tough times recently due to low-cost competition and a key doctor leaving.
I think Monash IVF does have a positive future because families are delaying trying for children until later in life, meaning they’re more likely to need reproductive assistance.
Monash IVF is currently trading at 10x FY18’s estimated earnings with a grossed-up dividend yield of 10.1%.
Paragon and National Vet Care are both exciting options and I expect they will deliver market-beating growth over the next few years.
I’m not sure about Monash IVF at the moment because it’s unknown how long low-cost competitors will drag the profit down.
Motley Fool contributor Tristan Harrison owns shares of NATVETCARE FPO and Ramsay Health Care Limited. The Motley Fool Australia owns shares of NATVETCARE FPO. 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.
- The ASX 200 slid 0.72% lower today – October 20, 2020 5:05pm
- Why I just bought this ASX share for the long-term – October 20, 2020 1:22pm
- More royal commission pain: NAB (ASX:NAB) gets a $15 million fine – October 20, 2020 12:23pm