I believe that healthcare is an excellent sector to invest in and the ASX is home to a number of exciting healthcare shares.

The world’s population continues to age, which will help drive growing demand for additional healthcare services over the next few decades. Alongside this, the cost of healthcare services continues to rise.

Here we look at 2 ASX healthcare shares that I believe have strong long-term growth potential: Ramsay Health Care Limited (ASX: RHC) and ResMed Inc (ASX: RMD).

Ramsay

Ramsay has evolved significantly over the past few decades. It has transitioned from a small Australian operation to become Australia’s largest private healthcare provider, with operations in 11 countries including the United Kingdom, France and Italy. The company is also significantly larger than the number two hospital operator in Australia, Healthscope Limited.

Ramsay’s size and scale enable it to spread its operating costs. This also provides it with a competitive advantage in negotiations with health insurers. Although Ramsay’s overall debt position is relatively high, in my opinion it appears to be manageable.

This ASX healthcare share has been impacted by the ban on non-essential surgeries.  As a result, its share price was hit hard in the early phase of the crisis. However, elective surgeries are now beginning to recommence in Australia with other markets set to follow. Therefore, Ramsay may emerge from its current issues faster than first anticipated.

Also, Ramsay has successfully closed a number of key government deals in Australia and the United Kingdom during the pandemic. These deals will ensure that the company’s hospitals do not run at a loss during the current period.

ResMed

ResMed manufactures devices and cloud-based software solutions for the treatment of sleep apnoea and other chronic respiratory illnesses.

ResMed has grown to become one of the world’s leading sleep treatment companies and is now a major US-based global company. The company employs more than 7,000 people worldwide.

It provides end-to-end connected health solutions that can be used in the home, reducing the financial and resource burden of in-hospital treatment.

The global potential market for sleep apnea is huge. It is estimated that there are one billion people impacted by sleep apnoea worldwide and more than 80% undiagnosed cased globally.

New product launches and successful targeted acquisitions have all helped drive revenue growth during the past few years. This growth has continued recently, with Ramsay recording a very strong 47% increase in net income during the third quarter of FY 2020.

More reading

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• You could beat the market in the 2020s with these ASX healthcare shares

Motley Fool contributor Phil Harpur owns shares of ResMed Inc. The Motley Fool Australia has recommended Ramsay Health Care 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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The wild gyrations on the market are throwing up some opportunities for ASX investors with leading brokers upgrading a few ASX shares today.

The S&P/ASX 200 Index (Index:^AXJO) recorded its best gain in two months as it surged by over 4% on Tuesday.

That’s a marked turnaround from the recent heavy sell-off due to worries of a second COVID-19 wave of infections.

I doubt we have seen the last of the big swings in the market but those looking to buy well-priced ASX stocks during the turmoil might want to put the following two upgraders on their watchlist.

More left in the tank

The first is the Super Retail Group Ltd (ASX: SUL) share price. Never mind that the outdoor and auto accessories retailer’s shares jumped a whopping 9.9% on Tuesday to $8.58.

Morgans thinks there’s more upside as it upgraded its recommendation on Super Retail to “add” from “hold”.

The change in rating comes after management’s trading update and a $203 million capital raising.

“We think SUL can now attract a higher market rating given the resilience its businesses have shown throughout COVID and the restructured balance sheet,” said the broker.

“Its businesses also look well placed to benefit from some key thematics including: increased domestic tourism and leisure activities, home-based fitness and a general acceleration in online consumption.”

Morgans upped its price target to $9.25 from $7.84 a share.

Good medicine

The Healius Ltd (ASX: HLS) share price also got a boost after Credit Suisse upgraded its call on the stock to “outperform” from “neutral” today.

The broker’s bullish recommendation comes on the back of the sale of Healius’ medical centres to private equity outfit BGH Capital for $500 million.

That’s more than what Credit Suisse thought the assets were worth but that isn’t the only thing that got Credit Suisse excited.

Revenues from the group’s pathology and radiology divisions have also improved significantly in recent weeks.

The divestment allows management to focus on growing these businesses and to play catch up with rival Sonic Healthcare Limited (ASX: SHL).

“HLS is currently trading on 10.6x FY21 EBITDA, which is relatively in line with the multiple paid for Medical Centres, the least attractive & lowest return generating business unit,” said Credit Suisse.

“In our view, Pathology and Imaging deserve to trade at higher multiples.”

The broker’s 12-month price target on Healius is $3.25 a share.

More reading

• 3 ASX 200 shares to buy for income and growth
• Why I think this ASX 200 rally is fake
• UBS picks the best ASX retail stocks for the post COVID-19 world
• 3 fantastic ASX 200 shares to buy right now
• Leading brokers name 3 ASX 200 shares to sell today

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended 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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The two unloved ASX shares in this article could stage a big turnaround if things go their way.

COVID-19 caused most shares to crash during February 2020 and March 2020. Many of those shares have since recovered. Some of them have even gone on to hit new highs like Afterpay Ltd (ASX: APT).

But some ASX shares are still lagging behind. They are seemingly unloved by the market. But I think they could stage a big turnaround around if things go their way:

Share 1: Challenger Ltd (ASX: CGF)

At the time of writing the Challenger share price is still down around 50% from where it was just before the COVID-19 share market crash.

This ASX share is the leading annuity provider in Australia. An annuity provides a guaranteed source of income for people from their capital. It sells annuities under its own name and it also offers a white label product for a number of other financial institutions.

The low interest rates across the world is definitely a problem for Challenger. The RBA has pushed Australia’s interest rate down to just 0.25%. Challenger needs to generate a return to pay for the annuities that it issues. It’s much harder to make a decent return from fixed interest investments when interest rates are almost 0%.

However, I think the ASX share is priced too cheaply for the long-term. Interest rates could rise again and sales remain robust. In the third quarter of FY20 Challenger reported total life sales of $949 million, up 9% compared to the prior corresponding period. Total annuity sales were down 10% to $593 million but other life sales were up 71% to $356 million.

COVID-19 and the Hayne Royal Commission has caused disruption for financial advisers. But I believe these effects will dissipate as time goes on and life goes back to normal.

One of the most important things in my opinion is that Challenger is still guiding for normalised net profit before tax of $500 million to $550 million in FY20. I think this would be a solid result under the circumstances.

Don’t forget, Challenger didn’t cut its dividend during the GFC. So the grossed-up dividend yield of 9.6% could be the ongoing dividend payment. The dividend alone could be a solid return from this ASX share.

Share 2: Brickworks Limited (ASX: BKW)

The Brickworks share price is still down 22% from the 20 February 2020 level.

Brickworks is a diversified building products business with two additional asset divisions. It owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares which provides reliable earnings and growing dividends.

The ASX share also owns a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG). The rise of ecommerce is helping increase the demand for industrial properties. The new industrial estate at Oakdale in New South Wales will materially increase the value of the property trust and its rental income once the project is completed.

Investors have rightly identified that construction in Australia faces a difficult time in the shorter-term because of the economic impacts caused by COVID-19.

However, I don’t think that demand for bricks, masonry, roofing and so on has been reduced forever. Construction is known for being cyclical. I believe that construction will return to somewhat normal once the economy has completely opened up and normal immigration can restart. The $25,000 HomeBuilder scheme could also help Brickworks in the shorter-term.

I’m excited by the potential of the recent US acquisitions that Brickworks has made because of how large the market is in North America. The US is also dealing with the impacts of COVID-19, but again, it won’t last forever.

The ASX share also happens to be one of the best dividend shares on the ASX in my opinion. It hasn’t cut its dividend in over four decades. It currently offers a grossed-up dividend yield of 5.3%.

Foolish takeaway

Both of these ASX shares look cheap to me. They have fallen on hard times but I think they could bounce back nicely as Australia continues its recovery from COVID-19. Out of the two I’d prefer to go for Brickworks because it’s hard to say how long interest rates will still at these ultra-low levels.

More reading

• 2 ASX blue chip shares I think every portfolio should hold
• My ASX share for the week
• If I won the lottery I’d buy these 6 ASX shares
• 12 top ASX dividend shares to buy in June 2020
• ASX shares I’d buy if this decline is a second COVID-19 crash

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Challenger Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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