MENU

2 small cap healthcare shares you don’t want to miss

I’m a fan of the healthcare sector. I like it because most businesses in the industry have a reliable source of earnings – patients will usually spend what it takes to remain alive and healthy. Plus, people don’t choose when they get sick or injured.

I also like the healthcare industry because it’s projected that expenditure will keep increasing over the long-term. The ageing population means that more people will require healthcare, the older we get the more likely we are to need healthcare intervention. It also helps that our total population is growing.

Here are two small cap shares to potentially profit from the sector:

Paragon Care Ltd (ASX: PGC)

Paragon operates as a healthcare equipment and device distributor for various clients like hospitals and aged care providers.

It keeps acquiring bolt-on businesses, such as the recent surgery business acquisition, so that it expands its offering to sell more products to the same client and also attain new customers. Hopefully the bigger Paragon gets the larger the economies of scale will become.

In time more patients in hospitals (due to ageing demographics) should lead to more demand for Paragon’s products.

Paragon is currently trading at 13x FY19’s estimated earnings.

Zenitas Healthcare Ltd (ASX: ZNT)

Zenitas is another small cap healthcare operator. It provides primary care, allied care and home care. It can keep patients within its system by cross-referring people to different segments of its business when necessary.

I believe home care and allied care are exciting areas because people want to remain healthy as possible – being active is part of the solution. If they are sick or having trouble then I’m sure people would rather be treated at home rather than a hospital, I know that would be my preference. It also plays into the government’s desire to avoid expensive hospital visits.

Zenitas management are predicting that it will achieve organic revenue growth of between 7.5% to 10% in FY18. It’s currently trading at around 19x FY18’s estimated earnings.

Foolish takeaway

I believe both businesses are excellent opportunities because their share prices have been beaten up in recent months. However, small caps are riskier than large caps and the share prices will likely remain volatile. At the current prices I’d probably go for Zenitas because it’s expecting growth whereas Paragon may not deliver growth this year.

Other exciting growth ideas could be these top hot stocks.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison owns shares of Zenitas Healthcare Ltd. The Motley Fool Australia has recommended Paragon 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!