When it comes to a long-term investing mindset, I believe ASX healthcare stocks are an essential ingredient. Although it’s no secret that we are all getting older, we are also living longer and the balance of old and young in this country is tipping towards the former. This gives us a rare certainty in investing – a predictable and inevitable tailwind.
Whist there are many ASX healthcare stocks out there, just because there are tailwinds doesn’t mean all are automatic winners. Here are two healthcare stocks, which in my opinion, represent some of the best the ASX has to offer.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is Australia’s largest private hospital owner/operator and has a proven track record of delivering a consistently high return on invested capital (in simpler words, it turns money into more money very well). With our ageing population likely to place increasing pressure on Medicare and the public health system over the next decades, I think private health will be well placed (and encouraged by governments) to take up some of the slack.
Ramsay’s size and scale has enabled the company to leverage bargaining power in negotiating with the health insurance and equipment companies it works with, enabling the company to uphold a reputation for quality care at reasonable prices. In my opinion, Ramsay is a quality ASX healthcare company and one worthy of consideration.
CSL Limited (ASX: CSL)
CSL is our biggest ASX healthcare company and also happens to be the third-largest public Australian company (at the current time). CSL has two primary divisions: Seqirus and Behring CSL. Behring is a world-leader in blood plasma research and treatment, whereas Seqirus focuses on vaccine development and manufacturing. Australia’s response to the 2009 swine flu pandemic was contracted to Seqirus, which resulted in the government ordering 21 million vaccines from them.
CSL is a high-performing company that, through its hefty research and development budget, is always at the vanguard of its fields. This company is another ASX healthcare winner and (in my opinion) would serve any long-term investor well.
When it comes to quality ASX healthcare stocks, in my opinion you don’t need to look that deep. These two companies would, in my view, be very well placed in any investor’s portfolio who wants to take a position in some future demographic trends. Both companies pay a small but rising dividend as well, which is something else to consider!
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended 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.