One area of the market which I think is home to a lot of exciting shares is the healthcare sector.
Two that I feel are standouts at the small end of the sector are listed below. Here’s why I think they are worth watching very closely:
Mach7 Technologies Ltd (ASX: M7T)
The first small cap healthcare share to look at is Mach7. It is a medical imaging data management solutions provider which uses software to create a clear and complete view of the patient. This software helps to inform diagnosis, reduce care delivery delays and costs, and, importantly, improve patient outcomes.
While this product alone has a sizeable market opportunity, the company has recently expanded its offering via the acquisition of Client Outlook. The acquisition of this leading provider of an enterprise image viewing technology has increased Mach7’s total addressable market from US$0.75 billion to a sizeable US$2.75 billion. Given that Mach7 generated revenue of $9.1 million in the first half, it clearly has a long runway for growth over the next decade. This could make Mach7 shares a great long term option.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a healthcare technology company which uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. It has been growing its market share in the United States at a rapid rate in recent years and currently has an installed software base covering over 27% of U.S. women screened for breast cancer. The sizeable increase in its installed base has led to very strong revenue growth, with the company more than doubling its subscription revenues in FY 2020.
The good news is that Volpara still has a very long runway for growth and is aiming to increase its average revenue per user (ARPU) materially in the future. Management is looking to grow its ARPU to upwards of US$10 per user, up from US$1.04 per user at present. It feels it can achieve this by having radiologists utilise its full product suite during screening sessions. If it delivers on this, then I suspect the Volpara share price will be materially higher at the end of the decade.
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
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MACH7 FPO and VOLPARA FPO NZ. The Motley Fool Australia has recommended MACH7 FPO and VOLPARA FPO NZ. 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 I would buy ResMed and these ASX growth shares – August 12, 2020 5:31pm
- 2 safe and strong ASX dividend shares to buy during the COVID-19 crisis – August 12, 2020 4:45pm
- Are these ASX small cap shares heading for big things? – August 12, 2020 4:21pm