Finding Strength in Healthcare Supplies
Nathaniel is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Are you one of the many investors looking to take advantage of the rising demand for healthcare in this country?
Over the coming decade, the healthcare industry is primed to benefit greatly from a series of macroeconomic tailwinds. As a result of healthcare legislation, it is expected we will see 30 million more people in this country receive access to healthcare, thus, it is expected that healthcare demand will increase dramatically. Additionally, the baby boomer population isn't getting any younger, and it's expected that by 2020, we will have a 30% increase in the number of citizens over the age of 65.
Now, if you are looking for some safer exposure to the healthcare sector, I may have found a few great options in the medical supplies industry. While supplies may not be as alluring as biotech, the industry stands in a equally attractive position to take advantage of healthcare demand. In this article, I would like to highlight a few names to consider for your longer-term investment portfolio.
Up first, McKesson (NYSE: MCK), a diversified healthcare company positioned well for broad growth. In a recent trip to the hospital, I was very impressed with the quantity of McKesson products used throughout a variety of different procedures. Everything from basic medical supplies to complex surgical offerings, the company delivers a comprehensive portfolio of health care products, technology, equipment, and related services across the country.
McKesson is currently the largest pharmaceutical distributor in North America with over 40,000 distribution points. What caught my eye when researching this company was the potentially lucrative medical technologies business. With greater healthcare demand, coupled with staff shortages, the healthcare industry is likely to see a rise in demand for automated offerings to ease the strain.
McKesson automates the health care delivery processes with a wide variety of clinical, financial, and administrative software applications. With the drastic shortage of nurses is expected to rise, the company's nursing automation solutions should be in particular demand. These solutions offer hospitals faster processing times and reduced patient care times for nursing staff, thus saving healthcare provides significant costs.
Next up, Medtronic (NYSE: MDT), the world's largest medical device maker. The company offers investors broad exposure across a range of medical device industries including endovascular, neuromodulation, surgical technologies, and diabetes. Medtronic has positioned itself as an industry leader in the diabetes space with its proprietary integrated diabetes management system.
The company's system combines world class glucose monitoring technology with rapid acting insulin pumps to offer patients rapid treatment, greatly enhancing patient safety. Medtronic is the only manufacturer to offer this product combination which sets the company up well to gain market share in the future.
Last up, Henry Schein (NASDAQ: HSIC), a more diversified global supplier of medical, dental, and animal health supplies. This company has been around for over 80 years and in this time, it has developed a reputation for offering the highest in quality supplies. As of today, the company has a large footprint to say the least with over 100,000 products reaching almost 775,000 customers across the globe.
Of late, we have seen rising dental demand coming from our aging population due in part to greater insurance coverage and dental awareness. As the population continues to grow older, the company will benefit from greater demand for its dental correction products. Additionally, I personally believe as the housing recovery continues, we will see pet ownership levels return to pre-recessionary levels.
This bodes well for Henry Schein as the company is a major player in veterinary medical supplies business. Historically, as incomes rises, which they are, families are more likely to take on the responsibility of pet ownership.
Foolish wrap up
Medical supplies companies offer investors diversified exposure to a greater healthcare industry. The entire healthcare sector is positioned to perform well over the coming decades as our population ages and gains access to a greater selection of medical offerings. Medtronic, McKesson, and Henry Schein all stand as industry leaders and should perform relatively well within the healthcare sector.
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Nathaniel Matherson has no position in any stocks mentioned. The Motley Fool recommends McKesson. The Motley Fool owns shares of Medtronic. Try any of our Foolish newsletter services free for 30 days. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!