In Australia many investors have recently bought into the excitement around the technology sector as shares in the likes of online-accounting business Xero Limited (ASX: XRO) zoom to astronomical valuations as they’re considered disruptors to traditional industries like desktop-based accounting.
However, technological disruptors are vulnerable to disruption themselves thanks to the fast pace of technological development.
Take how money transfer business OFX Group Ltd (ASX: OFX) disrupted the foreign exchange services of the big banks like Commonwealth Bank of Australia (ASX: CBA) only to now face disruption itself from what claim to be markup free transfer businesses like TransferWise.
As such the big price tags of some technology companies could tumble quickly anytime over the next five years or so if new technology disrupts them.
One sector with long-term growth prospects that is probably less vulnerable to disruption or competition is the healthcare sector.
This is because of its regulatory complexity, patent protections, and the specialist expertise of many operators. Below are three blue-chip healthcare shares that could offer investors better long-term growth than some of the popular tech shares.
Ramsay Health Care Limited (ASX: RHC) shares have fallen around 14% over the last six months after the private hospital operator warned in August that it only expected ‘core EPS growth up to 2%’. The weak forecast was blamed on challenging conditions in France and the UK. While, Ramsay is facing some short-term headwinds over the long term it is well positioned to grow organically, via expansion of new sites, or via acquisition, as with its existing attempt to buy Swedish hospital group Capio AB.
CSL Limited (ASX: CSL) shares have nearly tripled over the past 5 years and this blood products and flu vaccine business is forecasting underlying net profit growth of 10%-14% in FY 2019. It has a strong competitive position and invests heavily in research and development to develop new commercial medicines and products.
Cochlear Limited (ASX: COH) shares have also fallen back nearly 20% from record highs hit at the start of September. At $176.60 today the shares are still expensive using standard valuation metrics, but Cochlear offers solid long-term growth prospects thanks to its market-leading hearing aid products and the strong underlying demand for them.
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Motley Fool contributor Yulia Mosaleva owns shares of Commonwealth Bank of Australia, CSL Ltd., Ramsay Health Care Limited, and Xero. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Cochlear Ltd. and Ramsay Health Care Limited. 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.