ConvaTec Group’s a rock-solid, dirt-cheap UK healthcare share I’m considering buying today. Not only does the business have market-leading positions in areas like stoma bags, wound dressings and catheter-related products. The products it manufactures remain in high demand at all points of the economic cycle. And I expect global consumption to keep steadily rising as healthcare investment increases.
Okay, like many other medical shares, ConvaTec faces the danger that its products might fail to pass regulatory scrutiny. This can end up costing a fortune in lost revenues and additional expenses. But to my mind, the UK share’s other qualities offset this threat. Today ConvaTec shares sell at 220p apiece.
Riding the strong housing market
Britain’s brickmakers are doing a roaring trade as robust housing demand supercharges production rates. In recent months Forterra has lifted its profits expectations thanks to strong housebuilding activity and a healthy home improvements market. I’m expecting uptake of its product to remain strong too, as low interest rates and government support to first-time buyers will in all likelihood underpin solid and sustained homebuyer demand.
My main concern around Forterra is the growing threat of cost inflation. I’m encouraged by the brickmaker’s ability to largely pass higher costs to its customers. Though I’m also aware that past performance is not always a reliable guide as to what lies ahead. Today Forterra trades at 275p per share.
In rude health
Britain’s elderly population is growing rapidly. There are many stocks that I can buy to make money from this demographic phenomenon and Impact Healthcare REIT is one that I’m particularly enthusiastic about. The business operates residential care homes, an industry in which capacity has long failed to grow in line with demand. Consequently, rents at the business continue to move steadily higher.
As a real estate investment trust (or REIT), Impact Healthcare is obliged to pay at least nine-tenths of annual profits out in dividends. So I fully expect the business to keep paying above-average dividends (indeed its yield for this sits at a fatty 5.8%). I’d still buy this cheap UK share despite the threat that it may struggle to find staff due to Brexit-related changes to immigration rules. Impact Healthcare changes hands around 118p per share.
A cheap UK property share
Like that healthcare play, Warehouse REIT is also required to pay the lion’s share of yearly earnings out via dividend payments. As a result yields here also blast past the market average, at 4% and 4.2% for the next two fiscal years. I expect this cheap UK share to thrive as the growing e-commerce channel will supercharge demand for its warehouse space. The CBRE estimates that Britain will require an extra 60m square feet of warehousing room between now and 2025.
Warehouse REIT is expanding to make the most of this opportunity. While growth through acquisitions carries risks such as disappointing returns and unexpected costs, I’d still be tempted to buy the property giant right now. Warehouse REIT shares trade at 168p today.