Although the Ramsay Health Care Limited (ASX: RHC) share price has risen almost 7% this year, I don't believe it is too late to invest in the private hospital operator.
In fact, at the current share price I think Ramsay is great value for buy and hold investors. Here are three reasons why:
Strong tailwinds.
Management has forecast the global population aged 60 or above to more than triple by 2050. With 223 hospitals across six countries and potential brownfield and greenfield expansion opportunities, I believe Ramsay is in a perfect position to profit from the expected increase in demand for healthcare services. This should allow the company to grow earnings at an above-average rate for the foreseeable future.
Good value.
Whilst its shares are up 7% year-to-date, they are down 13% from their 52-week high of $84.08. This means its shares are changing hands at 30x trailing earnings. Whilst this may still sound expensive, it is only a fraction ahead of the healthcare average of 29x earnings. But with its growth prospects amongst the strongest in the industry, I think the premium Ramsay's shares trade at is justified.
China expansion.
Last year Ramsay scrapped plans for a joint venture in China as it didn't meet its high standards. Whilst this was a disappointment, I don't believe it will be long before we see the company operating in the country. After all, management has pointed out the chronic disease opportunity in the country numerous times. With an estimated 83 million diabetics and a wealthy and ageing population, China seems like a natural fit for Ramsay if it can navigate through strict regulations.
Overall, I think Ramsay is one of the best buy and hold investment options on the market today and would choose it ahead of its peers Healthscope Ltd (ASX: HSO) and Primary Health Care Limited (ASX: PRY).
