One area of the market which has performed exceptionally well over the last decade has been the healthcare sector.
Since this time in 2010, the S&P/ASX 200 Health Care index has risen a remarkable 450%. This compares to a more modest ~39% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period, excluding dividends.
The good news for investors is that there are a number of healthcare shares that have been tipped to continue to outperform the market. Here are two:
Nanosonics Ltd (ASX: NAN)
One thing the pandemic has taught us, is that infection control is very important. This bodes well for infection prevention company Nanosonics. It is the name behind the industry-leading trophon EPR disinfection system for ultrasound probes. It is also aiming to launch several new products in the near future which have similar addressable markets. Though, it is worth noting that these launches continue to be delayed.
Nevertheless, one broker that thinks investors should be patient is UBS. The broker believes Nanosonics is a high-quality and structural growth story and expects the company to benefit from post-COVID infection prevention tailwinds. Its analysts have put a buy rating and $7.20 price target on the company’s shares.
ResMed Inc. (ASX: RMD)
ResMed is a sleep treatment-focused medical device company that has been growing at a very strong rate over the last few years. This has been driven by its industry-leading products in a sleep treatment market that is growing fast. Pleasingly, management remains confident on its outlook and notes that there are an estimated ~1 billion people impacted by sleep apnoea worldwide. From these, it believes just ~20% have been diagnosed.
Analysts at Credit Suisse believe the company is well-placed for growth and have recently upgraded ResMed’s shares to an outperform rating with a $31.00 price target. It believes ResMed is well-placed to benefit from a shift to home healthcare following the pandemic.
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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 Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and ResMed Inc. 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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