Financial news wires are reporting that investment analysts at U.S. financial services leader Citigroup have put a bullish $148 price target on shares in Australian healthcare leader CSL Limited (ASX: CSL).
I have written perhaps 100 times on this website over the past 4 years as to why investors should look to stuff their shares portfolios full of the ASX's best healthcare companies.
And not for nothing either.
Below are the past five-year returns for the four leading healthcare companies I have recommended smart investors buy over and over since 2013.
- CSL shares up 250% over the past 5 years.
- Cochlear Limited (ASX: COH) shares up 112% over the past 5 years.
- ResMed Inc. (CHESS) (ASX: RMD) up 205% over the past 5 years.
- Ramsay Health Care Limited (ASX: RHC) up 257% over the past 5 years.
The reason I have been rather trite in recommending these companies is that in all honesty the local share market does not possess that many high-quality companies with wide earnings moats to support strong long-term profit growth outlooks.
The four companies above possess these characteristics in my opinion and it's no surprise that their share prices have followed their earnings and dividend growth higher over time.
Their strong free cash flows have also allowed CSL and ResMed to conduct share buybacks that are naturally supportive to earnings per share growth.
Experience has shown myself and others that when it comes to investing it pays to forget about focusing on what might change in the years ahead to focus on what won't change.
For starters it's much easier that way and is likely to lead you to the best investment ideas in the healthcare sector, while avoiding wealth-destroying companies in other sectors that are long on promise, but woefully short on delivery.
You don't need to be a whiz-kid at Citigroup then to realise that companies like CSL with powerful tailwinds, excellent management, wide moats, and shareholder focused capital management policies are likely to produce good returns over the long term. Again, I would suggest smart investors look to buy into these companies over the five years ahead when their valuations come into reasonable territories.
