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3 ASX shares to profit from rich baby boomers

There are some businesses that are strongly benefiting directly or indirectly from rich baby boomers.

It’s the generation with the most wealth and the companies that are servicing them could be ones to benefit from the tailwinds. However, these companies are not risk-free:

Ramsay Health Care Limited (ASX: RHC) 

Private health insurance is something that wealthy people are able to pay for if they wish, which benefits Ramsay as one of the largest private hospital businesses in the world.

There is likely to be a growing number of elective surgeries as baby boomers get older. For example, knee surgeries are expected to materially rise in the coming years because of increased long-term jogging on concrete surfaces.

If private health insurance affordability can be addressed then Ramsay could be one of the better defensive businesses with its expanding hospital network and continuing profit & dividend growth.

However, things like not-for-profit private hospitals and higher levels of home care could become problems in the future.

Class Ltd (ASX: CL1) 

Class offers cloud software for self-managed super fund (SMSF) accounting. You have to be well off to have your own SMSF.

The company has seen its share price rise by 68.8% since the start of September 2019. The company generates pleasing recurring earnings from its current client base and it’s trying to generate new earnings by selling new products to existing clients and selling into new markets. For example, Class Trust has received positive early engagement.

But, BGL has stepped up its offering in recent times, hurting the growth of Class. 

Challenger Ltd (ASX: CGF) 

Challenger allows retirees to turn their capital into a guaranteed source of fixed income.

The royal commission and low interest rates has hurt Challenger’s short-term prospects but over the long-term the income needs of retirees will need to be met one way or another.

Looking at Challenger’s target demographic, the number of people over 65 is projected to rise by 40% over the next decade and 70% over the next two decades.

The company continues to look to new products to meet higher demands and meet the changing rules.

Foolish takeaway

Each business has fairly attractive tailwinds over the coming years, but Class and Challenger may face more competition as time goes on whilst Ramsay faces specific structural challenges. Of the three at the current prices I’d probably go for Class because it is unlocking new growth avenues, whereas the other two seem to have low organic growth at the moment.

But for growth I’d rather buy these top shares for my portfolio instead.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of Class Limited. 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.

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