Why Sigma Healthcare shares have surged 25% higher in November

The Sigma Healthcare Ltd (ASX: SIG) has been a top performing stock on the ASX 200 November as its climbed 25% higher to $0.73 per share.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sigma Healthcare Ltd (ASX: SIG) shares have been one of the top performers throughout the month of November.

It's been a rollercoaster of a ride for much of the ASX 200 this month. The S&P/ASX 200 Index (INDEXASX: XJO) fell lower in the first week before climbing towards a new record high late in November.

Sigma shares have been one of the key contributors as the Aussie healthcare stock has rocketed 25.86% higher to $0.73 per share.

Why were Sigma shares so successful in November?

The biggest factor driving Sigma shares towards their new 52-week high valuation has been a mooted deal with My Chemist/Chemist Warehouse Group (MC/CW Group).

Sigma confirmed talks with the Aussie pharmacy group in early November and said it could resume the supply of fast-moving consumer goods (FMCG) to MC/CW Group.

This announcement saw Sigma climb higher on the ASX in early November while a further update put the icing on top.

On 25 November, Sigma confirmed that it had signed a major first-line agreement with MC/CW Group. The agreement is effective from 1 December and is expected to reach full run rate by July 2020.

Sigma shares climbed higher on the news and have been continuing their strong run throughout this week.

Despite some initial costs for transitioning the agreement, management expects positive earnings benefits from the new deal.

Are there other ASX healthcare stocks I could buy?

While Sigma shares have been performing strongly this month, so too have a number of ASX 200 healthcare companies.

CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH) are continuing to race higher despite their already-lofty valuations.

Likewise, the Sonic Healthcare Ltd (ASX: SHL) share price is one to watch after continuing to set and smash its own record highs.

The ASX healthcare sector looks to be charging higher on strong earnings and investor demand for non-cyclical stocks in 2019.

Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd. 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.

More on Share Market News

IPO written in dark blue with a yellow background.
Financial Shares

ASX fintech stock backed by Mastercard slumps 9% on debut

Meet the ASX's newest fintech company.

Read more »

A young woman smiles as she rides a zip line high above the trees.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors kicked off the trading week in style today.

Read more »

young woman reviewing financial reports at desk with multiple computer screens
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these stocks.

Read more »

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
Share Fallers

Why Bell Financial, IPD, Megaport, and Resolute Mining shares are falling today

These shares are starting the week in the red. But why?

Read more »

Person pointing at an increasing blue graph which represents a rising share price.
Share Gainers

Why Liberty, Lovisa, Novonix, and SG Fleet shares are storming higher today

These shares are starting the week strongly. But why? Let's find out.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Industrials Shares

This ASX share is tumbling 13% on reduced earnings forecast

Earnings are expected to fall in the first half, much to the dismay of the market.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Mergers & Acquisitions

Guess which ASX All Ords stock just rocketed 23% on a $1.2 billion offer

Investors are piling into the ASX All Ords stock amid a $1.2 billion takeover bid.

Read more »

Excited group of friends sitting on sofa watching sports on TV and celebrating.
Technology Shares

Why today is a big day for Pro Medicus shares

Records are being broken by this share on Monday. What's going on?

Read more »