3 Under-the-Radar Healthcare Stocks You Should Know About

Dive into how a company like Extendicare Inc (TSX:EXE) helps your portfolio hedge against the aging population in Canada.

| More on:
Pills pharma

Image source: Getty Images

Anyone can talk about the blue-chip healthcare stocks which garner the attention of financial analysts. However, the real value is in the stocks that no one talks about. As hedge fund manager and value investor Li Lu once said, “To be a better investor, you have to stand on your own. You just can’t copy other people’s insights.” Here are three stocks to help you stand on your own.

Extendicare (TSX:EXE)

Extendicare is a long-term-care facilities and management company focused on senior care. With operations both in Canada and the United States, Extendicare boasts a market capitalization of $706.92 million across its network of 121 healthcare centres. This little-known stock employs approximately 23,000 workers trained in senior care and living under its three brands: Extendicare, Esprit Lifestyle, and ParaMed.

The macroeconomic trend of an aging population in Canada creates a strong market opportunity for this company. Its business sectors have a wide scope to capture the business opportunity created by the increase of Canadian seniors through its operations in nursing care, home care, retirement living, and management and consulting services.

It has seen strong growth since the start of 2019 with the stock trading from $6.49 on December 31 to today’s market open of $8.06. However, over a five-year period, the stock has remained relatively flat with only a 19% increase in price compared to the S&P 500’s increase of 55% over the same period.

By announcing the addition of private equity firm Sandpiper to its board of directors on April 22, 2019, Extendicare becomes a stock to watch more closely. It will be a point of interest for investors to see how it can find new ways to tap potential.

BELLUS Health (TSX:BLU)

BELLUS Health is a Quebec-based biopharmaceutical company focused on novel treatments for disorders related to hypersensitization, most notably therapeutics for chronic cough. Like Extendicare, it operates in a growing macroeconomic environment where approximately 26 million adults in the United States suffer from a chronic cough.

The selling point for biopharma companies are the monopoly-like patents on drugs or therapeutics. For BELLUS, this major competitive advantage comes in the form of its lead drug candidate, BLU-5937. Following its successful phase one clinical study, BELLUS expects to initiate its clinical phase two study in chronic cough patients by mid-2019, with top-line results anticipated in mid-2020. This should give investors a solid timeline on when to expect volatility in the stock.

BELLUS carries a market cap of $213.242 million with a negative beta of -0.03. This presents investors with an interesting opportunity to hedge against the market using this stock.

VieMed (TSX:VMD)

VieMed has an exciting outlook without creating much press. Its core business is conducted through two wholly-owned subsidiaries Home Sleep Delivered and Sleep Management. VieMed specializes in supplying home medical equipment to patients with post-acute respiratory diseases in the United States. VieMed, like its two previously mentioned counterparts, is also a beneficiary of the aging population.

As the largest independent specialized provider of non-invasive ventilation in the United States, VieMed boasts strong financial metrics to couple with its attractive industry growth opportunity. Investors have enjoyed a healthy 42% price growth in the past year and can remain positive with the industry growth opportunity being so attractive.

In the next 19 years, an average of 10,000 people will turn 65 on a daily basis. This will cause U.S. healthcare expenditures in the respiratory disease space to grow from $46.5 billion at a 5.3% CAGR until 2020.

Finding value in hidden gems

As an investor, you should already have a clear idea of what industry you like to invest in. If it happens to be healthcare, these three stocks should provide some insight on stocks that don’t get much attention from financial analysts. However, to find true value, one must look where no one else does.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris Fabian has no position any of the stocks mentioned. The Motley Fool owns shares of Viemed Healthcare Inc. Viemed Healthcare Inc. is a recommendation of Hidden Gems Canada.

More on Investing

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »