Rudi’s View: Healthcare, Megatrends & FoMo

Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | Jun 06 2024

By Rudi Filapek-Vandyck, Editor

So far this year, ResMed ((RMD)) shares are down -4.4%, with Cochlear ((COH)) shares down -0.8% and CSL ((CSL)) scraping into positive territory to the tune of 1.2%

Doesn't sound like much? Always good to know the ASX200 is up 1.46% ex-dividends. Banks and technology stocks have been the flavour of the moment throughout the first five months, followed by utilities and REITs, and to a lesser extent discretionary retailers and gold producers.

Market strategists at Wilsons are making the call this week, and not for the first time, that Australian healthcare look poised for market outperformance on a combination of attractive looking valuations and the prospect for above-average growth.

The sector generally is currently offering significantly more growth than the rest of the market generally, point out the strategists, while the average healthcare stock is trading below valuations seen over the past five years. Wilsons doesn't hesitate to use the label "compelling value".

Just to add a little more context to the broker's reasoning: while average EPS growth for the ASX200 is projected to be negative for the year ahead to the tune of -4%, the average growth forecast for the ASX300 Healthcare index is no less than 20%. The average PE multiple for the sector has fallen to 28x versus a five-year average of 33x.

Wilsons' Focus Portfolio is Overweight on Aussie healthcare through holdings in CSL, ResMed, and upcoming biotech Telix Pharmaceuticals ((TLX)).

Analysts at Janus Henderson took a longer view into the future and concluded the healthcare sector might well become one of the biggest users, and beneficiaries, of artificial intelligence within the decade ahead. Already, reports the asset manager, some Ai applications are having a meaningful impact on healthcare delivery and on the growth outlook of selected companies.

Janus Henderson has identified three areas that should have investors' attention:

-data building for drug discovery
-medical device use and imaging
-pre- and post-procedural assistance

In summary: Artificial intelligence (Ai) has enormous potential to improve healthcare delivery across the globe. To be continued, without any doubt.

The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE