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3 top small cap healthcare shares on my watchlist

One area of the share market that I believe has extremely bright long-term growth prospects is the healthcare sector. I think the sector is home to several high quality up and coming companies which investors should be better acquainted with.

Three that have caught my eye are listed below. Here’s why I like them:

Medical Developments International Ltd (ASX: MVP)

This healthcare company has been around for decades, but only recently has it decided to embark on a global expansion project with its Penthrox “green whistle” pain management product. Management believes there is a huge opportunity for the product to disrupt the pain management market at the expense of opioids and I completely agree. However, its shares do change hands on sky-high multiples now, which does make it a high-risk investment. Though, if its global expansion is a success it could more than justify the premium.

Paragon Care Ltd (ASX: PGC)

Paragon Care is a provider of integrated services to the health and aged care markets. I think it is one of the more promising small cap healthcare shares, especially after its recently announced acquisition of REM Systems for a net enterprise value of NZ$54.4 million. Though there are integration risks to consider, I remain optimistic that management will make a success of this. This should put Paragon Care in a position to deliver solid top and bottom line growth over the coming years. So with its shares trading at a reasonable 15x estimated forward earnings, now could be an opportune time to consider a buy and hold investment.

Zenitas Healthcare Ltd (ASX: ZNT)

Another small cap healthcare share that I think could be a great buy and hold option is Zenitas Healthcare. This year the home care and health services company is expecting to report earnings before interest, tax, depreciation, and amortisation of between $13 million and $13.5 million. With its market capitalisation hovering around the $80 million mark, I think this makes it great value. Especially given its solid growth prospects from two recent earnings accretive acquisitions and a favourable Federal Budget which should be a tailwind for the company in the medium-term.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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