One area of the Australian share market which has generated consistently strong returns for investors over the last 10 years has been the healthcare sector.
Since this time in 2011, the S&P/ASX 200 Health Care index has generated a mouth-watering return of 380% for investors.
This strong gain has been underpinned by increasing demand, better technologies and treatments, and ageing populations.
The good news for investors is that these tailwinds are not going away any time soon. This could make it well worth considering an investment in the healthcare sector. But which healthcare shares should you buy? Here are two highly rated options:
Cochlear Limited (ASX: COH)
One blue chip healthcare share to look at is Cochlear. It looks perfectly positioned to benefit from the growing number of over 65s globally. This is because Cochlear is a global leader in the development, manufacture, and distribution of cochlear implantable devices for the hearing impaired.
As hearing loss is typically a part of the ageing process, a growing number of over 65s globally is expected to lead to an increase in demand for hearing solutions in the next few decades. And thanks to its industry-leading products, significant investment in research and development, and the industry’s high barriers to entry, Cochlear appears well-placed for long term growth.
Macquarie is positive on the company and has an outperform rating and $241.00 price target on its shares. This compares to the latest Cochlear share price of $198.98.
Volpara Health Technologies Ltd (ASX: VHT)
At the small side of the market you will find Volpara Health Technologies. It is a growing healthcare technology company that offers cost-effective, mission-critical software that helps radiologists deliver high quality breast imaging services.
Volpara’s software leverages artificial intelligence imaging algorithms to assist with the early detection of breast cancer. The company estimates that it currently has a US$750 million annual recurring revenue (ARR) opportunity in breast cancer screening. This compares to the ARR of NZ$19.9 million it recorded in the first half of FY 2021.
Morgans is a fan of Volpara. It currently has an add rating and $1.71 price target on the company’s shares. According to the note, the broker has been pleased with its market share gains, growing SaaS revenue, and high gross margins. The Volpara share price is currently trading at $1.50.
Where to invest $1,000 right now
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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 and recommends VOLPARA FPO NZ. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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