It has been an incredibly strong month for the TSX Index of stocks. The index is up over 4% in October, and it has enjoyed consecutive winning sessions for more than two weeks straight. Yet, with many stocks near all-time highs, you might be wondering how and what to invest in next?
Well, one perennially strong sector is healthcare. Despite, its trustworthy public health system, Canada just does not have a bustling private healthcare sector. As the pandemic revealed, Canadians often rely on our neighbours in the U.S. to access new health technologies and therapies.
Yet, fortunately, Canada does have some smaller up-and-coming businesses that are set to strongly benefit from health-related tailwinds for years ahead. Here are three health-focused TSX stocks that look like attractive buys now and for long into the future.
A TSX growth stock
Over the past decade, healthcare has been steadily shifting its focus on the treatment of ailments to a focus on holistic health, lifestyle choices, and prevention. One TSX stock that benefits from this trend is Jamieson Wellness (TSX:JWEL). It is Canada’s number one manufacturer and marketer of vitamins and supplements.
The exciting part is that it is becoming a global leader in supplements. Over the past few years, it has been building out strong sales channels in Asia and particularly China (a market many multiples the size of Canada).
This has propelled annual sales growth of around 13% over the past few years. Likewise, adjusted EBITDA has compounded on average by over 17%! Over the past four years, this TSX stock has returned 120% to shareholders. Also, in that time, it has also paid a nice growing dividend. Today, this TSX stock yields 1.5%. For income and growth, this is a great stock to buy and hold for years to come.
A new IPO focused on health logistics
Andlauer Healthcare Group (TSX:AND) is a new TSX stock listing that looks interesting. It provides the backbone infrastructure for Canada’s healthcare and pharmaceutical supply chain.
It operates coast-to-coast shipping, storage, and distribution network for a majority of the pharmaceutical goods that come into Canada. Given its highly optimized logistics network, the company has a strong competitive moat. It has the scale, infrastructure, relationships, and expertise to dominate its transportation niche.
For the past 10 years, Andlauer has grown revenues by a compounded annual rate of 10%. Over the past five years, EBITDA has accelerated at a slightly faster 10.5% compounded annual rate. Yet, in that time frame EBITDA margins have increased from 23.5% to over 25% today.
Not only is this TSX stock growing, but it is getting more profitable. This company trades at a fair valuation today and should provide a nice balance of organic and acquisition growth going forward.
A TSX healthcare stock paying a great dividend
NorthWest Healthcare Properties REIT (TSX:NWH.UN) also plays an important role in the infrastructure of healthcare across the world. It operates 190 hospitals, medical offices, and life science properties across Canada, Brazil, Australia, and Europe.
Given the critical nature of these properties, they enjoy very long leases and stable +97% occupancy. Similarly, nearly 75% of its assets have inflation-indexed leases, so its rents are hedged against input costs rising.
NorthWest has been pivoting to a joint-venture model where it helps acquire and manage desirable health properties for institutional investors. This has helped the REIT improve its debt metrics and steadily improve its cash flow per share growth profile.
Today, this TSX stock pays a $0.0667 per unit distribution every month. That equals an attractive dividend yield of 6%. That is a pretty attractive income return for owning some of the best healthcare assets in the world.