The world is currently enduring an economically unsettling time. So it's more difficult than ever to pick winning ASX shares.
But one expert has identified a particular sector that seems to have just started a turnaround.
It's such early days that investors could get in on the ground level if they act quickly.
Switzer Financial Group director Paul Rickard said this week that ASX shares in the healthcare industry have staged a remarkable comeback this month.
"I think the healthcare sector is going to do pretty well. In fact, it's been doing well in the last four to six weeks."
Indeed, the S&P/ASX 200 Health Care (ASX: XHJ) index is up 6.8% this month, after it plunged 12.4% from the start of the year to the end of June.
Banks and mining are shaky, and the money has to go somewhere
Rickard reckons the upward momentum will continue, due to several drivers.
The first is that there is nervousness about the two dominant industries on the ASX — banking and resources.
"Banks, there are question marks about whether high interest rates will really impact profits and bad debts in the long term," said Rickard on Switzer TV Investing.
"In the resources sector people are still worried about commodity prices and the R word — recession — and what that might do."
Another factor is that the Australian dollar is trading lower against the US dollar. Many ASX-listed healthcare companies generate the majority of their revenue from North America and elsewhere outside of Australia, and a weakening dollar makes their exports more competitive.
"Thirdly, we're coming into reporting season, and healthcare companies have traditionally done really well in reporting season," said Rickard.
"Companies like CSL Limited (ASX: CSL) have a great record of positive surprises."
A recession-busting investment?
While CSL is the pick of the industry for Rickard, he named a couple of other ASX shares that could benefit from the healthcare comeback.
"There seems to be value in Resmed CDI (ASX: RMD), which is creeping up, and also Cochlear Limited (ASX: COH)."
Rickard added that healthcare products and services are fairly resilient against economic downturns or recession, and perhaps that's what's triggering the July comeback.
"I think there's value in each of those health companies. Still trading on high multiples… but to me the stocks aren't going down in price and I think that means they're going to go up," he said.
"I think there'll be some good performance out of healthcare."
