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Should you buy these popular healthcare shares?

With Australia’s population ageing fast and chronic disease burden increasing, demand for healthcare services is expected to grow strongly over the next couple of decades.

I believe these tailwinds should put many of Australia’s healthcare companies in a position to grow strongly over the long-term, which could make them great options for investors today.

With that in mind, are these three popular healthcare shares in the buy zone?

Cochlear Limited (ASX: COH)

According to a company presentation, an estimated one in three people aged over 65 are affected by hearing loss. As the population of Australia, and the globe, grows older, Cochlear’s target market will expand accordingly. Thanks to its industry-leading hearing products I believe Cochlear is in a position to continue delivering above-average profit growth for a long time to come. While its shares are a little on the expensive side, I expect in the long-term they will justify this premium.

Ramsay Health Care Limited (ASX: RHC)

One of the most popular healthcare shares on the Australian share market would have to be this leading private hospital operator. It isn’t hard to see why, either. Over the last 10 years the company’s shares have provided investors with an average annual total return of 22.2%. Unfortunately, though, I think this run is over for now and believe Ramsay could struggle for the next year or two as its international operations weigh on its performance. Because of this, I would hold out to get in at a cheaper price further down the line.

Zenitas Healthcare Ltd (ASX: ZNT)

One of my favourite picks in the healthcare sector right now would be this growing home care and health services company. I expect it to be a big winner from the National Healthcare Reform, which aims to push the burden of healthcare services from hospitals into primary care. It hasn’t been listed on the ASX for a long time, but I have been impressed with its progress. In its recent half-year results Zenitas delivered pro forma net revenue of $34.8 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $5 million. This was a 53% and 51.5% increase, respectively, on the prior corresponding period.

Finally, here are three shares I'm tipping to provide strong average annual returns over the next 10 years.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cochlear Ltd., Ramsay Health Care Limited, and Zenitas Healthcare Ltd. 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 Scott Phillips.

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