So far, Australia’s ability to effectively combat the spread of coronavirus, minimise the impact on our healthcare system and begin rolling back social distancing measures has given the market cause for optimism. This is all great news and gives the Australian economy the best possible chance of rebounding from the crisis as quickly as possible. However, there is still a fair amount of uncertainty on the horizon. The underlying financial impact the coronavirus crisis has had on many companies may not be fully known until they start reporting their results in a few months’ time.
Given all this, it could be a good idea to start fortifying your portfolio with some solid defensive companies, including ASX 200 healthcare shares.
ASX 200 healthcare shares I’d buy today
Healthcare shares tend to perform well even in a crisis, as demand for their products remains robust. And in a healthcare crisis such as the one we are facing, many of these companies see demand for their products surge. Here are 3 companies I believe will deliver strong FY20 results and could insure your portfolio against potential market volatility later this year.
Sonic Healthcare Limited (ASX: SHL)
As a global healthcare company specialising in laboratory medicine, including diagnostics and pathology, Sonic Healthcare has been heavily involved in the international fight against coronavirus. It operates in many of the regions hit hardest by COVID-19, including the USA, Germany, the UK and Belgium.
The company officially withdrew its FY20 earnings guidance in late March, citing the uncertain economic conditions caused by the coronavirus across many of its markets. However, in the same update, the company noted that so far this year it has been performing in line with its previously issued guidance. It also acknowledged the frontline role it was playing to combat the pandemic. This includes by testing thousands of patients for COVID-19 as well as continuing to increase its testing capacity in many markets.
Sonic’s share price has rallied strongly since plunging to a 52-week low of $20.06 in late March. Currently trading at a little over $27, however, it is still well short of its pre-coronavirus high of $32.07.
ResMed Inc (ASX: RMD)
The share price of ASX 200 healthcare company ResMed was also savaged during the mid-March panic-selling spree. However, after plunging below $20 for the first time since October last year, the ResMed share price rebounded just as quickly. It is currently still up over 15% for 2020 and within touching distance of the 52-week high of $26.66 it recorded prior to the crash.
Based out of San Diego, ResMed specialises in the development of medical devices for the treatment of respiratory illnesses. It ramped up production of its ventilators threefold in the March quarter in order to help treat the mass influx of patients suffering with COVID-19. The company has won contracts with both the US and Australian governments to supply thousands of ventilators.
In its March quarterly update, ResMed reported revenue growth of 16% over the prior year’s comparative period to US $770 million, while net operating profit was up by 39%.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
Like ResMed, Fisher & Paykel Healthcare specialises in medical devices for the treatment of acute respiratory conditions. However, unlike ResMed, the company does not produce ventilators. Instead, it manufactures other equipment, including humidifiers, which are still required for the treatment of COVID-19 patients. Like ResMed, Fisher & Paykel has ramped up production in order to meet the increased demand brought about by the pandemic.
Fisher & Paykel’s share price has been largely unaffected by the coronavirus pandemic. While most other share prices were plummeting in March, the company’s shares raced to a 52-week high of $31.47. Investors were buoyed by the fact that, in the midst of all the panic-selling, the company upgraded its full year operating revenue guidance to NZ$1.24 billion. Fisher & Paykel also advised its net profit after tax is expected to be in the range of NZ$275 million to NZ$280 million.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. and Sonic Healthcare 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.
- Why National Storage shares are a great “set and forget” option for your portfolio – June 26, 2020 10:28am
- Is it time to buy into ASX tourism companies like Qantas and Webjet? – June 23, 2020 11:01am
- Temple & Webster shares continue to grow despite coronavirus restrictions – June 19, 2020 2:27pm