The COVID-19 pandemic has changed how consumers and governments look at health and hygiene. As a result, shares in the sector could be poised to blossom in 2020 and beyond.
Here are 3 ASX shares exposed to the healthcare sector you should think of buying now for the long term.
Ansell Limited (ASX: ANN)
Ansell is a global leader in developing, manufacturing and distributing health and safety protection solutions. The company could be well poised to benefit in the post-COVID world as the population becomes more aware of safety and hygiene protocols.
In late March, Ansell reaffirmed its earnings per share guidance for FY20 and cited strong demand for its hand and body protection products. Ansell also assured investors that its balance sheet remains in a strong position and the company is working to maximise its product output.
Medibank Private Ltd (ASX: MPL)
The COVID-19 pandemic could result in consumers and households becoming more aware of their overall health and encourage trips to hospitals and general practices. As a result, many might look to spend money on private health insurers like Medibank for peace of mind.
In addition, with the federal government’s budget coming under pressure post-pandemic, private healthcare might become more popular as public health systems become constrained. This could see the emergence of alternative care models such as telehealth becoming more prominent.
In a recent letter to shareholders, Medibank provided assurance that the COVID-19 pandemic is expected to have no overall impact on the company’s FY20 financial outlook. The company also assured shareholders of its strong and debt-free balance sheet, whilst also elaborating that Medibank is well-positioned to benefit from changes in the healthcare sector.
Sonic Healthcare Limited (ASX: SHL)
Sonic is the third-largest pathology provider in the world, generating relatively defensive revenue from radiology and pathology services. Although the pandemic forced the company to withdraw its earnings guidance for FY20, Sonic was able to secure a contract from the Australian government to provide testing for COVID-19.
In addition to playing a crucial frontline role, Sonic also boasts a strong financial position with a balance sheet boasting almost $1 billion in cash on hand. This could allow Sonic to fuel its growth through acquisitions of smaller, struggling providers. Additionally, with the public being forced to live with the virus until a vaccine is found, Sonic could benefit from further contracts in the future.
Should you buy?
In my opinion, the ASX healthcare sector is poised to benefit from various tailwinds in the long term. Apart from an ageing population and the demand this has for healthcare, the sector could benefit from renewed consumer behaviour and the public’s approach to health and wellbeing post-pandemic.
I suggest that investors create a watchlist of ASX shares that could benefit from a boom in healthcare and wait for positive price action before making an investment decision.
These healthcare shares have great potential for the long term. Here are 5 more ASX shares that could blossom over the long run.
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More reading
- In a post-COVID world, could Australia be the next superpower?
- 3 ASX 200 pandemic winners and 3 losers
- Protect your portfolio with these defensive ASX shares
- ASX shares and investing trends that could boom post COVID-19
- Why Dicker Data, Medibank, Mesoblast, & Orora are dropping lower
Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. 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.
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