Why this fundie says Estia Health (ASX:EHE) shares are a smart pick for 2022

Here's why this fundie is bullish on the aged care provider's stock.

| More on:
healthcare worker overseeing group of aged care residents at table

Image Source: Getty Images

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

The future looks bright for the Estia Health Ltd (ASX: EHE) share price, according to one expert.

Wilson Asset Management portfolio manager Tobias Yao is backing the aged care provider's stock for the coming year.

At the time of writing, the Estia Health share price is $2.18.

Let's take a look at what aspects of Estia Health appeals to the fundie.

Are Estia Health shares a buy for 2022?

Yao is backing the Estia Heath share price for 2022, stating the aged care sector could be in for a golden year.

Yao told Livewire the sector has had a rough trot recently, but it's poised to boom – and he believes Estia is a particularly "efficient operator" within it.  

As Yao pointed out, the aged care industry was recently the focus of a Royal Commission. It was also hit hard by the COVID-19 pandemic.

The Royal Commission into Aged Care Quality and Safety's findings were handed down in March. They included recommendations of minimum qualifications and an increased award rate for aged care staff, as well as the fact that aged care facilities should always have a registered nurse on-site.

Additionally, in its financial year 2021 results, Estia stated all its facilities were impacted by COVID-19 over the 12 months ended 30 June. Victoria's second wave of infections saw occupants testing positive for the virus at 11 of Estia's facilities. Sadly, the outbreak resulted in 36 deaths among Estia's residents.

However, the space now looks to be a hotbed for takeovers and potential government funding, says Yao.

Estia's formerly ASX-listed aged care peer, Japara Healthcare was recently taken over. Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) also attempted to takeover aged care operator Regis Healthcare Ltd (ASX: REG) last year.

Finally, Yao is bullish on the aged care stock following the most recent federal budget. Within it, the federal government committed to provide $3.5 billion to the sector each year for the next 5 years.

The Estia share price is already boasting a strong recent run. It has gained 23% since the start of 2021.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Healthcare Shares

Shot of a scientist using a computer while conducting research in a laboratory.
Healthcare Shares

Should I buy the dip on CSL shares?

A leading fund manager gives his verdict on the growth prospects for CSL shares.

Read more »

A woman relaxes on a yellow couch with a book and cuppa, and looks pensively away as she contemplates the joy of earning passive income.
Healthcare Shares

NIB shares have soared 24% this year. Does Macquarie expect this to continue?

Will this private health insurer continue to deliver big returns? Let's find out.

Read more »

Woman presenting financial report on large screen in conference room.
Healthcare Shares

Up nearly 30% in a year, should I buy Fisher & Paykel shares before its earnings result?

Will the ASX 200 healthcare stock continue to outperform?

Read more »

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

CSL shares among most expensive on ASX. Is now a good time to buy?

Analysts predict CSL share price growth will keep on coming.

Read more »

A man looking at his laptop and thinking.
Healthcare Shares

Should you buy the dip in the ResMed share price?

Let's see what one leading broker is saying following yesterday's pullback.

Read more »

A woman puts up her hands and looks confused while sitting at her computer.
Healthcare Shares

Down 5%: What's going on with the ResMed share price?

Let's see what has spooked investors today and caused them to push the sell button.

Read more »

Beautiful young woman drinking fresh orange juice in kitchen.
Healthcare Shares

Guess which ASX 300 stock is jumping 11% on big news

This stock is having a day to remember on Thursday. But why?

Read more »

A group of medical researchers stands side by side with each other wearing white coats in their research laboratory with scientific equipment in the background.
Healthcare Shares

Trump executive order to hit these 3 ASX pharmaceutical stocks

Donald Trump’s new executive order caused these 3 ASX pharmaceutical stocks to crash on Monday.

Read more »