Over the last 10 years the healthcare sector has been a great place to invest your money.
During this time the S&P/ASX 200 Health Care index has climbed a remarkable 413%.
While I don’t necessarily expect the same level of gains over the next 10 years, I believe the tailwinds the sector is experiencing are likely to underpin further outperformance in the future.
In light of this, I think it is well worth having exposure to the sector in your investment portfolio.
But which shares should you buy? Two healthcare shares I think could generate strong returns for investors in the future are listed below:
Nanosonics Ltd (ASX: NAN)
Nanosonics is an infection control specialist which I believe could be a great long-term investment. This is thanks to the impending launch of several new products targeting unmet needs and its core trophon EPR product. The latter product is used by healthcare organisations to prevent ultrasound probe cross-infection.
At the end of the first half, the trophon EPR product’s global installed base had grown 17% over the last 12 months to 22,500 units. While this is a large number, it is still only a fraction of its total addressable market which is estimated to be 120,000 units. Due to its best in class status, I expect more market share gains over the coming years. This should support strong sales growth from units and also recurring revenue growth from the consumables the device requires. And if its new product launches are a success, the sky could be the limit for Nanosonics.
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.
While times have been hard for its network over the last couple of years and this is unlikely to ease in the immediate term, I believe its long term outlook is very positive given the increasing demand for healthcare services globally. In light of this, I think it is worth focusing on the long term and considering a patient buy and hold investment in its shares.
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Returns as of 7/4/2020
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended Ramsay Health Care 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.
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