There are few areas of the market that stand to benefit more from population growth and ageing populations than the healthcare sector.
While there are a great number of options to choose from in the sector, three of the best in my opinion are listed below. Should you buy their shares?
Cochlear Limited (ASX: COH)
Arguably one of the best positioned companies to profit from the ageing population tailwind is this hearing solutions company. But it isn’t just Australian’s ageing population that it will benefit from, the company sells its industry leading products in over 100 countries worldwide. So as the global population ages and the number of people worldwide with hearing issues balloons, I expect Cochlear’s earnings to grow meaningfully. This could make it a great buy and hold investment.
CSL Limited (ASX: CSL)
Another top buy and hold investment option in the healthcare sector in my opinion is CSL. The global biotech company’s shares may have been on fire over the last 12 months, but I don’t think it is too late to invest if you’re prepared to be patient and hold on for the long-term. This year CSL expects to achieve net profit after tax in the range of US$1,680 and US$1,710 million. Which means growth of almost 28% year-on-year at the top end of its guidance. I think there’s a good chance that the company will outperform its guidance thanks to strong demand for its products and a better than expected performance from its Seqirus influenza business. In FY 2019 and beyond I expect more of the same.
ResMed Inc. (ASX: RMD)
While I do have slight concerns over potential overpayments by Medicare in the U.S. for replacement positive airways pressure device supply claims that did not meet its requirements, if this proves to be inaccurate then I expect ResMed will continue its impressive growth for some time to come as the sleep treatment market expands meaningfully. In its latest quarterly update the company revealed a quarterly profit of US$132.5 million, up 32% on the prior corresponding period.
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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. and ResMed Inc. 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.