I have taken a strong interest in healthcare stocks since I found out that the big healthcare companies have smashed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) over the last five years.
Given the projections for growing life expectancies it is reasonable to assume that healthcare demand will continue well into the next decade.
With such a wide range of companies to choose from here are four healthcare companies I think could be long-term winners.
Heathcare services
Health insurance provider NIB Holdings Limited (ASX: NHF) grew earnings per share (EPS) by 8.8% last financial year (FY15) and is on track to continue this momentum into the 2016 financial year (FY16). The company's guidance is for operating profit in the range of $85-$90 million, an increase of up to 10% on the year just gone and it has a nice dividend yield of 3.8%.
To balance the exposure to health insurance I would add Capitol Health Ltd (ASX: CAJ) to the portfolio. Capitol Health is following a 'roll up' acquisition strategy for diagnostic imaging centres, a strategy currently loathed by many investors.
Imaging centres are where you go when you need X-rays, CT scans, MRI scans or ultrasounds and Capitol Health grew revenue 23% in FY15, of which 8% was from organic demand. Heading into FY16 the company expects to maintain its strong performance.
Healthcare Information Technology (HIT)
Information technology is essential to transform the healthcare industry from a lethargic paper mess to an efficient machine. A number of companies are helping to lead the way here, from profitable local provider Global Health Limited (ASX: GLH) to Kiwi operator Orion Health Group Ltd (ASX: OHE) which has been winning big contracts in the U.S.
Product companies
While my dream healthcare portfolio would include breathing device maker Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), at a current price-to-earnings ratio of 32 the company commands a significant price premium compared to the S&P/ASX 200 Health Care Index on 27.
To this end ResMed Inc. (CHESS) (ASX: RMD) is a more attractively priced option to also benefit from long-term demand. ResMed grew revenue by 8% in FY15, the same rate as Fisher & Paykel Healthcare.
