Should you buy these popular healthcare shares?

With the global population ageing and chronic disease burden on the rise, demand for healthcare services is expected to grow strongly over the next couple of decades.

In my opinion this makes the healthcare sector a great place to look for buy and hold investments.

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

CSL Limited (ASX: CSL)

If you were to buy only one healthcare share, I would make it CSL. I think that this biotherapeutics company is one of the highest quality companies in Australia and capable of growing its earnings at an above-average rate for the foreseeable future. This is thanks to its strong core business and the better than expected progress being made by its Seqirus influenza business. Its shares may look a little expensive, but I believe they are more than deserving of the premium.

Nanosonics Ltd. (ASX: NAN)

I’m a huge fan of Nanosonics and believe the infection control specialist has a very bright future ahead of it. But given the nosebleed multiples that its shares trade on and the sudden surge in short interest, I am a little hesitant to buy its shares right now. According to the latest data out of ASIC, Nanosonics is now the eighth most shorted share on the ASX with 11.7% of its shares held short. One positive, though, is that this week one of its directors picked up almost $50,000 worth of shares on-market.

Ramsay Health Care Limited (ASX: RHC)

While I think in the long-term this private hospital operator’s shares will move meaningfully higher from here, I wouldn’t be a buyer of its shares just yet. I feel the weakness being experienced in its European operations and falling private health insurance participation levels in Australia will weigh heavily on its performance in the short to medium term. This could potentially drive its share price notably lower from where it stands today. Because of this, I would stay away from Ramsay until there are signs of improvement across its whole business.

Whilst waiting for Ramsay to find its feet again I would suggest investors consider one of these top blue chip shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended Ramsay Health Care 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 Scott Phillips.

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