I would like to take advantage of the lower share prices to buy some more health stocks. What would you recommend?
I have a small holding in Medibank Private. Should I sell it?
A: The companies I would consider are CSL, Ramsay and Resmed. They are all trading on pretty high multiples – so you really need to take advantage of dips to buy.
In regard to Medibank Private, the market liked the result – which beat market expectations in regard to earnings and margin. Margin was up due to claims management and cost control. Around $2.40, Medibank is trading on a PE of 21.3 for FY16.
I am not a huge fan of Medibank. It is a cost story – not a growth story – so at a PE of 21 times, I think it is pretty fully priced.
Hope this helps.
