S&P/ASX 200 Index (ASX: XJO) healthcare shares have soared 39% since the sector pivoted just three months ago.

The S&P/ASX 200 Health Care Index (ASX: XHJ) slumped to a 9-year low on 3 June after a terrible 12 months.

The index fell 39% due to many headwinds, including higher costs of living prompting consumers to delay healthcare expenditure.

Eventually, ASX 200 healthcare shares became too cheap to ignore, and value investors swooped in to capitalise.

They targeted fallen blue-chip stocks at first.

Sector giant CSL Ltd (ASX: CSL) saw its share price skyrocket 32% in just the first month of the rebound.

Investors were further buoyed by CSL management’s outlook when the company reported its FY26 results last month.

This boosted the CSL share price further, and now the stock is up 82% since 3 June.

Not all healthcare stocks have performed as well, and experts say there are still good opportunities afoot.

If you’re looking for opportunities in this buoyant sector, here are two buy-rated ASX healthcare small-caps from the experts.

SomnoMed Ltd (ASX: SOM)

The SomnoMed share price is 34 cents, down 2.9% today and down 55% over 12 months.

Top broker Morgans refers to this ASX healthcare share as the “cheaper sleeper”.

Morgans has a speculative buy recommendation on SomnoMed shares.

The broker has a 12-month price target of 76 cents on this stock, which implies a potential 127% upside ahead.

Morgans said:

The FY26 result landed where the July trading update flagged, with revenue of A$114.5m and adjusted EBITDA of A$10.9m (9.6% margin), a touch under our A$11.1m EBITDA forecast.

The management restructure is now formalised (Karen Borg sole CEO, Greg Knight COO, Nathan Minnich CMO), removing the leadership overhang flagged in July and giving the FY27 growth reinflection case a settled team to execute against.

With A$16.8m net cash against a A$73m market cap, SOM is now trading on <8x EV/EBITDA, it’s too cheap.

Mach7 Technologies Ltd (ASX: M7T)

The Mach7 Technologies share price is 26 cents, down 5.5% today and down 13% over 12 months.

Morgans has a buy rating on this ASX healthcare share with a 48-cent target.

This suggests a potential 84% upside ahead.

Morgans said:

The market should be broadly comfortable with the result given recent trading updates, but new contract delivery remains the key requirement before investors are likely to begin marking the stock materially higher.

Revenue and OPEX landed broadly in line with guidance, while the NPAT miss was driven by a A$1.9m restructuring charge and a weaker tax benefit rather than deterioration in the core subscription business.

Moderate increase in target price due to model roll-forward, lower share count, and leaner-than-expected cost base.

Upside potential to target presents an opportunity but needs new contract momentum to spark renewed interest.

The post ASX healthcare shares are 39% higher since June. Are you missing out? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Mach7 Technologies. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

West African Resources Ltd (ASX: WAF) shares hit a new 12-month high on Thursday, after the company announced a record profit and a large special dividend.

Maiden dividend a windfall for shareholders

The company is now trading with a dividend yield of more than 5% after announcing it would pay a 20 cent per share, unfranked dividend to its shareholders.

The record date for the dividend is 18 September, with the dividend to be paid on 7 October.

West African Resources shares hit a fresh 12-month high of $4.06 on the news before settling back to be 4.7% higher at $3.96.

The gold miner said it had achieved records across the board in its first half, with revenue of $1.46 billion and a profit after tax of $437 million.

The company had $876 million in cash and 42,453 ounces of unsold gold bullion at the end of June.

Production for the full year came in at 232,905 ounces of gold.

West African Executive Chairman Richard Hyde said:

WAF delivered an outstanding result for the first half of 2026, with the Group’s first full six months of combined production from Sanbrado and Kiaka. The Group continued to generate strong profit margins from 232,905 gold ounces produced and 214,883 ounces sold at a realised sales price of US$4,744/oz and an AISC of US$1,823/oz. With two large, low-cost and long-life gold production centres at Sanbrado and Kiaka, WAF is positioned to build on its performance through the second half of 2026 and beyond. This is underpinned by the updated 10-year production outlook released on 31 March 2026.

Mr Hyde said the company also intended to accelerate its debt repayments over the next 12 months.

The company had $388.1 million in debt at the end of June.

West African Resources was also planning more than 100,000 metres of exploration drilling for the remainder of 2026.

The company’s guidance for the full year is for production of 430,000 to 490,000 ounces of gold.

Major expansion plans in the wings.

Previous announcements indicate West African Resources is targeting an average of more than 533,000 ounces of gold production per year from 2026 to 2035, with annual production to peak at 569,000 in 2030.

An upcoming drill program is planned to target mineralisation beneath the current Kiaka open-pit reserve.

The company added:

The … mineralisation at Kiaka remains open at depth, with a significant proportion of ounces located below the planned pit design and currently classified as Inferred Mineral Resources. The program is designed to assess the potential for open pit expansion or the development of a large‐scale underground operation following completion of the open pit.

The post West African Resources’ new dividend yield might surprise appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Wesfarmers Ltd (ASX: WES) share price has drifted lower in recent weeks. I think this makes the business a compelling buy for several reasons.

Wesfarmers is not exactly a household name, but the company is the owner of several recognisable businesses including Bunnings, Kmart, Officeworks, Target and Priceline.

The company has a healthcare division and a chemicals, energy and fertiliser division called WesCEF.

Regular earnings compounding

It’s my belief that the best businesses to own over the long term are those that can significantly grow earnings.

That doesn’t mean they need to grow profit by 25% per year. Instead, growing at a solid rate can make a big difference over several years. For example, if earnings grow at a compound annual growth rate (CAGR) of 8%, they double in nine years.

We don’t know exactly how Wesfarmers will perform, but it has a track record of compounding earnings at a solid pace over the past few years.

In the 2026 financial year, the company reported that its underlying earnings per share (EPS) grew 8.3%, driven by 3.4% revenue growth, despite difficult trading conditions.

I think the quality of the Kmart and Bunnings businesses will allow Wesfarmers to continue earnings growth at a good single-digit pace in the coming years.

The business reported that its return on equity (ROE) (excluding significant items) improved by 4.3 percentage points to 35.5% in FY26, showing that the business usually generates a great return on additional money invested in the company.

I think Kmart Group and Bunnings Group can continue to generate returns on capital (ROC) of around 70% going forward, which is another strong signal of future profit growth for Wesfarmers.

Rising profits are a great tailwind for the Wesfarmers share price over time.

Well-suited to succeed during high cost of living

Customers always want good prices for the products they buy. Kmart and Bunnings are considered leaders in their respective retail categories.

Australia is facing a high cost of living for the foreseeable future – I think this period will be an opportunity for Wesfarmers to capture further market share with the perceived lowest prices.

I like how Wesfarmers, particularly Bunnings, is working on expanding into new product categories, which increases its addressable market. Two of the latest areas of focus were pet care and auto care.

In the coming years, I reckon Wesfarmers will be able to improve its profit margins thanks to strong operating leverage, despite offering customers such low prices.

It’s possible that financial growth could accelerate during this period, rather than seeing a slowdown.

Better valuation of the Wesfarmers share price

The Wesfarmers share price is down 21% since July 2026, which is a significant and rapid drop. I think that makes it an appealing long-term buy, especially given how Wesfarmers continues to invest in new growth avenues like healthcare and lithium mining.

According to CommSec’s projection, Wesfarmers’ share price is valued at 27x FY27’s estimated earnings.

The post 3 reasons why the Wesfarmers share price is a buy appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.