Like the rest of the market, the healthcare sector has been out of form over the last few weeks.
This has led to the S&P/ASX 200 Health Care index losing 8% of its value in just a touch over a month.
Given the quality on offer at this side of the market, I believe this has created a buying opportunity for long-term focused investors.
With that in mind, here are two quality ASX healthcare shares I would buy today:
CSL Limited (ASX: CSL)
The CSL share price has been uncharacteristically out of form over the last few months and is down over 17% from its 52-week high. This has been driven by concerns over difficult plasma collection conditions. These collections are part of the manufacturing process for its lucrative immunoglobulins therapies. The pandemic is putting pressure on collection volumes, leading to lower donations and higher costs. This is likely to weigh on the margins of this key product range.
However, I’m confident that the company will overcome this and still deliver solid earnings growth in FY 2021. Especially given the expected increase in demand for influenza vaccines in the Northern Hemisphere winter. Looking further ahead, I believe its research and development pipeline holds a number of very lucrative therapies which could be key drivers of growth in the future. Overall, I feel the recent weakness in the CSL share price is a fantastic buying opportunity for investors.
ResMed Inc. (ASX: RMD)
Another high quality ASX healthcare share to buy is ResMed. This sleep treatment-focused medical device company’s shares are down 21% from their 52-week high. I believe this is a buying opportunity for investors looking for long term options in the sector.
This is because, thanks to its world class products, intuitive software solutions, and rapidly growing ecosystem, I’m confident the company can grow its earnings at a solid rate throughout the 2020s and beyond. Especially considering its massive and growing addressable market. Management estimates that there are 936 million sleep apnoea sufferers globally, with the vast majority of these undiagnosed. Given the growing education of the condition, I expect more and more diagnoses to be made over the coming years. This should underpin strong demand for ResMed’s products and software solutions.
Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now
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More reading
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- ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
- 5 stellar ASX growth shares that could smash the market in the 2020s
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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 CSL Ltd. The Motley Fool Australia has recommended 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.
The post Why now could be a good time to buy CSL (ASX:CSL) and ResMed (ASX:RMD) shares appeared first on Motley Fool Australia.
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