Over the last 12 months the healthcare sector has been one of the best places to invest.
During this time the S&P/ASX 200 Health Care index has put on an impressive gain of 38% compared to a 9.3% gain by the benchmark S&P/ASX 200.
While I would be surprised if the healthcare sector continued this level of outperformance over the next 12 months, I still feel it has the potential to provide market-beating returns.
With that in mind, here are three top healthcare shares I would buy:
Cochlear Limited (ASX: COH)
I think that this hearing solutions specialist is one of the highest quality companies on the local market. In August the company continued its strong run of profit growth when it posted a 10% increase in net profit after tax to $245.8 million. I expect similarly solid growth in FY 2019 and beyond thanks to its exposure to the ageing populations trend. As populations around the world get older, demand for hearing products is expected to increase. And as Cochlear’s industry-leading products are sold in over 100 countries worldwide, I feel it is well-positioned to capture this growing demand.
CSL Limited (ASX: CSL)
Another company I rated incredibly highly is CSL. The global biotech star has been a consistently strong performer over the long term and shows no signs of breaking the trend in the near term. During earnings season CSL released yet another stellar full year result when it posted a 15% increase in revenue to US$7,600 million and a 29% jump in net profit after tax to US$1,730 million. Management appears confident that its positive performance will continue in FY 2019 and has provided guidance of net profit after tax in the range of US$1,880 million to US$1,950 million.
ResMed Inc. (ASX: RMD)
ResMed is a leading sleep treatment company and a great buy and hold option in my opinion. Like Cochlear and CSL, it has a long track record of solid earnings growth and didn’t disappoint in FY 2018. It posted a 13% increase in revenue to US$2.3 billion and a 27% lift in income from operations to US$541.8 million. Thanks to the positive outlook for the sleep treatment market and its focus on the fast-growing cloud-connected medical device market, I feel confident there will be more of the same in FY 2019 and beyond.
And finally, whilst this top share isn't in the healthcare sector, I believe it has just as bright growth prospects as the shares above.
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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.