One area of the market which I think has outstanding long term growth potential is the healthcare sector.
This is due to the growing demand for healthcare services globally because of ageing populations and increasing chronic disease burden.
As a result, I think investing in the sector with a long term view could result in strong returns over the next decade.
Three healthcare shares that I think are worth looking at are listed below:
CSL Limited (ASX: CSL)
If you only buy one healthcare share, I would make it CSL. I believe this biotherapeutics company is Australia's highest quality company and well-positioned for solid long term growth. This is due to the quality of its CSL Behring and Seqirus businesses. Both are leaders in the industries, have world class products, and lucrative product development pipelines. The latter is underpinned by huge reinvestments in research and development (R&D) each year. In FY 2019 CSL invested US$832 million in R&D efforts across its businesses. It believes these investments are the engine that will help drive sustainable growth and I agree.
Nanosonics Ltd (ASX: NAN)
Another healthcare share to consider buying is Nanosonics. It is an infection control specialist which has been growing at a rapid rate over the last decade thanks to the increasing installed base of its trophon EPR disinfection system for ultrasound probes. Whilst demand for the system and the consumables it uses will likely decline during the pandemic, I expect a sharp rebound when the crisis passes. Outside this, I think the company is well-positioned for long term growth thanks to the launch of several secretive new products. Although little is known about the products, management has revealed that they have similar market opportunities to the trophon system.
Ramsay Health Care Limited (ASX: RHC)
Ramsay Health Care is a leading private hospital operator. It provides healthcare services from 480 facilities across 11 countries. This makes it one of the largest and most diverse private healthcare companies in the world. However, I don't believe Ramsay is stopping there. It has a strong balance sheet and historically has a penchant for earnings accretive acquisitions. So, it wouldn't be a surprise to me if it adds to its network again in the next 12 months. And although I'm not overly bullish on the company in the immediate term, I believe its long term outlook is extremely positive. This could make it worth considering a patient long term investment in its shares.
