Due largely to ageing populations around the world I feel the healthcare sector is one of the best places to make a long-term buy and hold investment.
But with so many shares to choose from it can be hard to decide which to buy. With that in mind, are these three healthcare shares in the buy zone?
CSL Limited (ASX: CSL)
CSL’s shares may be a touch on the expensive side compared to the market average, but I believe that the biotherapeutics company would still be a great buy and hold investment due to its leading immunoglobulin business and its soon to be profitable Seqirus vaccine business. I believe these businesses and the strong underlying demand it is experiencing has put the company in a position to deliver above-average long-term profit growth.
Lifehealthcare Group Ltd (ASX: LHC)
Although this medical device company expects to be impacted by reforms to the Prostheses List, the impact is nowhere near as bad as first feared. So much so management was able to reiterate its full-year guidance of high single to low double digit growth in revenue and earnings in FY 2018. If it delivers on this then LifeHealthcare’s shares could prove to be a bargain buy. They change hands at just under 16x trailing earnings and provide a trailing partially franked 5.1% dividend
Sigma Healthcare Ltd (ASX: SIG)
Due to the potential loss of its My Chemist/Chemist Warehouse Group (MC/CW) supply contract when it expires in June 2019, I wouldn’t risk an investment in Sigma despite how cheap it looks. Its dispute with the group may now have been resolved, but I’m not convinced that it is the end of the story. Losing that contract would leave a large gap in its earnings which would not be easy to fill.
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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.