The Australian share market has had an incredible start to 2015. The ASX 200 is up some 9% over the first three months of 2015 while the S&P/ASX 200 Health Care (INDEXASX: XHJ) index has beaten it by nearly 3%, rising 12% between January 1 and today.
The main drivers of the heathcare sector's performance have been three big names: Ramsay Health Care Limited (ASX: RHC), which is up 18% this year, Cochlear Limited (ASX: COH) which is up 17.5%, and ResMed Inc. (CHESS) (ASX: RMD), which is up an incredible 35%!
Too Expensive
These big jumps in the highest quality stocks, on top of a couple of strong years, have led investors to ask the question: Is there any health left in the healthcare sector?
I believe the patient investors will continue to see great performance from the ASX healthcare sector. The driving factor for this will be growing earnings, a lower Australian dollar, increased spending on health over the medium term and the continued poor performance of many other sectors.
Three companies set to be medicine to the hearts and minds of investors are:
Ramsay Health Care Limited, for the company's aggressive push into Europe and continued investment in its Australian private hospitals.
Pathology and medical imaging group Sonic Healthcare Limited (ASX: SHL) for its expansion potential outside of its operational bases in Australia, New Zealand, the United Kingdom, the USA, Germany, Switzerland, Belgium and Ireland.
ResMed's share price has nearly doubled over the last 12 months but I believe we will see it soar even higher as new products are developed and the group continues to work with suppliers and distributors to boost margins.
In my opinion, most investors have been brainwashed by the media's coverage of the hunt for yield, while the smart investor has been quietly accumulating healthcare stocks. The heathcare sector's returns have been enough to give a yield-hunting investor a heart attack. The index has thoroughly smashed every Australian high-dividend exchange traded fund and index that I could find.
The real risk now is missing out when everyone else realises what's been going on and jumps on board!
