Listed medical and diagnostic facilities operators are outperforming the market today as the floodgates to elective surgeries are swung open.

The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price and Sonic Healthcare Limited (ASX: SHL) share price jumped 2.7% each in the last hour of trade to $63.80 and $27.09, respectively.

The Healius Ltd (ASX: HLS) is trailing behind with a 1.9% increase to $2.40, but that’s still ahead of the 1.3% gain by the S&P/ASX 200 Index (Index:^AXJO).

Consensus earnings upgrade candidates

These companies could see a big boost to earnings as the Australian Financial Review reported on the upcoming “hidden wave” or elective surgeries and tests.

The federal government announced that it was loosening restrictions on elective surgeries as the country appears to have the COVID-19 pandemic under control.

The clampdown on non-life-threatening procedures was to ensure that our hospital system had the capacity to cope with the potential spike in emergency coronavirus patients.

Pent-up demand to hit

The warnings and response from the government to COVID-19 had another unintended consequence. Australians started putting off regular check-ups as they were worried about clogging up our health system and putting themselves in close proximity with possible COVID-19 patients.

The big drop in attendances and elective surgeries pressured the earnings of private hospitals and clinics, while falling demand for diagnostic tests (other than for coronavirus) impacted on Sonic.

However, that’s about to change and shares in Ramsay, Sonic and Healius could regain the lost ground from February.

Six-month backlog

Pent-up demand from deferred medical checks and minor procedures are likely to force medical facilities to operate overtime over many months.

The six-week clampdown on elective surgeries created a backlog of nearly 400,000 cases, according to consultant surgeon and senior lecturer at the University of Newcastle, NSW, Dr Peter Pockney.

He co-authored a major study on the return of elective surgery in 190 countries and he was reported in the AFR as saying that “it would take 22 weeks to clear if hospitals increase the number of surgeries performed each week by 20 per cent compared to pre-pandemic activity”.

Counting the costs

Elective surgeries are only one side of the problem. Australians have also put off cancer screening. The AFR also quoted the chief executive of Cancer Council Australia, Professor Sanchia Aranda, estimating that one in 10 people may have delayed checks during the lockdown.

If these delays lasted for six months, Professor Aranda believes 7,000 cancers will be picked up later. The later a cancer is detected, the higher the chance of death.

The only potential problem I see now is the waiting time to get in to see your doctor.

Not taking drastic action on COVID-19 costs lives, but acting aggressively to contain the pandemic is likely to be just as, if not more costly.

More reading

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• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited 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.

The post The next ASX sector in a post COVID-19 earnings upgrade cycle appeared first on Motley Fool Australia.

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The Graincorp Ltd (ASX: GNC) share price was up as much as 10.9% today after the grain operator announced an after-tax half-year profit of $388 million. It marked a return to profitability for the company which recorded a net loss after tax of $59 million in H1FY19. 

The result reflects a significant repositioning of GrainCorp’s portfolio. During the half year ended 31 March, GrainCorp sold the Australian Bulk Liquid Terminals business and demerged United Malt Group Ltd (ASX: UMG). 

What does GrainCorp do?

GrainCorp is a food ingredients and agribusiness providing services to the grain industry. It is involved in storage and logistics, marketing and processing of grains and oilseeds. Activities are focused on 4 main grains – wheat, barley, canola, and sorghum. 

GrainCorp operates globally, managing grain pools and the import, export, and marketing of grain. It also processes and crushes oilseeds and provides edible oils. The malt business, which produced malt products and brewing inputs, was demerged in March 2020. 

Business performance 

In the half year ending 31 March 2020, each of GrainCorp’s business segments was up substantially on the prior corresponding period. The Agribusiness segment performed well, notwithstanding a third year of drought in Australia. 

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $183 million in the March half and underlying net profit after tax (NPAT) was $55 million. Both were a substantial improvement on the prior period.

While COVID-19 presents challenges, food and agriculture are considered an essential service. GrainCorp plays a role in supporting the food and grain supply chain. Market conditions have improved considerably, with widespread rainfall across eastern Australia providing hope for a larger crop later this year. GrainCorp is well progressed in harvest readiness, including recruitment and training of seasonal workers. 

The company revised its capital structure during the half year to ensure minimal core debt. At the end of March, GrainCorp had zero core net debt. Its 10% minority stake in United Malt was valued at $112 million, providing additional financial flexibility. 

Outlook

GrainCorp is planning for higher grain exports in 2H20 with expectations of a higher crop in FY21. Favourable soil conditions across large parts of eastern Australia has supported widespread planting for the FY21 crop. Oilseed crush margins are expected to remain favourable in the second half due to prevailing canola and meal values. 

More reading

• Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower
• Why the best performing ASX stock might have more room to run higher
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• ASX 200 down 0.9%: Xero posts strong growth & Australian economy loses 594,300 jobs
• Why Breville, Graincorp, Mesoblast, & Newcrest shares are charging higher

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 ASX stock of the day: This ASX food share surged 11% today following a jump in profitability appeared first on Motley Fool Australia.

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As a big fan of buy and hold investing, I’ve been looking at how investments in many popular shares have fared if you’d bought in at their IPOs.

I recently looked at payments company Afterpay Ltd (ASX: APT) and biotech giant CSL Limited (ASX: CSL). If you’re interested in seeing how they’ve fared, you can read here and here.

Today I thought I would look at another market darling, electronic design software company Altium Limited (ASX: ALU).

While Altium might seem like it has appeared out of nowhere over the last few years, its IPO was actually a lot further back than you would imagine.

The Altium IPO.

On August 4 1999, Altium, then known as Protel Systems, completed its IPO and its shares were listed on the Australian Stock Exchange. The company raised $30 million at $2.00 per share, with the funds being used to assist in financing its growth strategies.

This means that if you invested $10,000 in Altium at its IPO, you would have ended up with 5,000 shares.

It hasn’t been a smooth ride for the company and its shareholders since the IPO to say the least. In fact, no doubt many early investors gave up on the company and sold off their shares after a series of missteps eventually led to its shares falling as low as 9 cents in 2011.

But those investors that were patient have certainly been rewarded. Thanks to the emergence of the Internet of Things (connected devices) and its award-winning printed circuit board design software, Altium’s shares have not looked back since hitting that low.

Prior to the coronavirus crash, the company’s shares were trading at an all-time high of $42.76. Whereas, today they are changing hands for $35.00. This means that those 5,000 shares you picked up at the IPO are now worth a cool $175,000.

But given its strong long term growth potential, I wouldn’t be selling these shares any time soon. As I mentioned earlier here, I think Altium’s shares could easily double in value again over the next decade.

More reading

• Double your money with these high quality ASX shares
• 3 top ASX 200 shares every investor should buy
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• Is the Altium share price a buy?
• ASX 200 drops over 1% at the market close

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 owns shares of AFTERPAY T FPO and Altium. 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 If you invested $10,000 in the Altium IPO, this is how much you’d have now appeared first on Motley Fool Australia.

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