The S&P/ASX200 health care sector index has risen to more than 25,000 points this month, up from 21,000 this time last year and somewhere in the late teens in 2016.
It’s likely our ageing population is partly to thank for solid performances in the healthcare realm, but strong players have also asserted themselves by making the best of regulatory changes and the uptake of new technologies.
Ramsay Health Care Limited (ASX: RHC)
Ramsay Health Care Limited operates 221 hospitals and 14 day surgery centres across Australia, the UK, France, Indonesia, Malaysia and Italy.
Ramsay opened on February 8 marginally down at $66.05 – and has been hovering just under $70 per share for some time.
Overall, Ramsay seems quite expensive, but it’s for good reason.
Ramsay has made several sound business decisions in recent times, managing to increase its share of the private hospital sector little by little and has been touted as the country’s “most recession-proof” stock more than once.
While declining private health insurance participation rates could be an issue in the long term, Ramsay will still flourish from rising elective surgery rates.
Analysts have slapped a neutral rating on Ramsay for now, but still price the stock at a $71.60 target.
All eyes will be on the global health services provider when it hands down its interim results on February 28.
SDI Limited (ASX: SDI)
Dental materials research and development company SDI Limited is making a name for itself across the US, Germany, Ireland and Brazil for its Australian-manufactured amalgam composite materials.
SDI Limited opened down on February 8 at 59c per share, but has recovered quickly following a less-than-favourable trading update which saw sales slump 2.2% or $33.6 million lower than expectations.
But SDI may have been overlooked by investors to this point, and on paper appears to have some solid growth strategies in place to propel the company forward in the next few years.
Its managed to steadily grow revenues without the use of acquisitions and could be less dependent on commodity markets as time goes on if its investment into glass ionomer and non-silver restoratives takes off as expected.
A healthcare small cap to watch.
Sonic Healthcare Limited (ASX: SHL)
Sonic Healthcare Limited is a medical diagnostics company with international laboratory, pathology and radiology services.
Investors who took a punt on Sonic have been rewarded with a steady upward trend in share price over the last few years with the stock up 1.6% to $24.78 on February 8.
Sonic had a good year on the market throughout 2017, booking record sales of $5.1 billion after a period of expansion and no disruptions from regulatory bodies.
Sonic’s largest division is its laboratory operations in Australia, giving the company a good home-grown approach for investors and there are not expected to be any nasty surprises when Sonic hands down its half-year results on February 15.
ResMed Inc. (CHESS) (ASX: RMD)
As one of Australia’s best performing healthcare stocks over the last decade, ResMed Inc is an international company with popular products for respiratory disorders such as sleep apnoea.
A quick view of ResMed’s historical share price charts is pleasing to the eye, with the stock rising steadily since 2012 and any indication of short term weakness quickly corrected.
ResMed Inc opened down 0.2% to $11.74 today, but is still up 23% since the same time last year.
ResMed is well-established and has been insulated from broader socio-economic factors in the past few years as the company maintained a firm focus on new technology, with the 2016 US$800 million strategic acquisition of clinical software company Brightree proving to be a good buy.
RedMed has kept its nose clean when compared to healthcare peers like Primary Health Care Limited (ASX: PRY) which is recently alleged to have fudged its books.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. and SDI Limited. 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.