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Are these healthcare shares in the buy zone?

With the global healthcare market expected to grow strongly over the next couple of decades as populations age and better treatments are developed, I think it is well worth investors having exposure to the sector.

Are these three healthcare shares in the buy zone?

Monash IVF Group Ltd (ASX: MVF)

This fertility treatment company’s shares have fallen heavily this year after a disappointing performance in FY 2018, a weak outlook for the year ahead, and internal struggles. The latter includes the exit of one of its key doctors and the sudden resignation of its CEO this week. David Morris quit as the company’s chief executive officer and managing director with immediate effect after less than a year in the job. Although this decline has left its shares trading at just 11x earnings, I have concerns this could be a value trap and would suggest investors stay away until its performance improves.

ResMed Inc. (ASX: RMD)

ResMed is a leading sleep treatment company which I believe would be a great investment option right now. It has a long track record of solid earnings growth and continued this trend in FY 2018 when 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. The good news is that 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.

Volpara Health Technologies Ltd (ASX: VHT)

One of the most exciting shares in the healthcare sector right now in my opinion is this healthcare technology company. Its shares have been on fire over the last 12 months thanks to its strong increase in annualised recurring revenues and its growing share of the U.S. breast screening market. Pleasingly, management isn’t resting on its laurels and is targeting an even greater share of the market this year. Thanks to the quality of its breast imaging analytics and analysis software and new product launch, I think there’s a good chance it will deliver on this. However, its shares are looking expensive now and investors may be best holding out for a pullback.

In the meantime, these blue chip growth shares could be great options.

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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 VOLPARA FPO NZ. The Motley Fool Australia has recommended Monash IVF Group 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.

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