Following the recent stock market correction, I’ve been looking to find the best shares to buy now for the next decade. But sometimes, the greatest opportunities can often already be in an investor’s portfolio. And that certainly seems to be true for menwith two existing holdings.
When investing for the long run, a tactic I like to deploy is to look at the sectors I believe will constantly be in demand. And while there are undoubtedly multiple answers, the one that excites me the most is healthcare — specifically medical technology.
We’ve got our fair share of medical device businesses here in the UK, like Smith & Nephew. But today, I’m travelling across the pond to the United States and looking at what I believe are some explosive long-term opportunities. Even more so today, with many seemingly trading at awesome discounts.
Are these the best shares to buy now?
One of the most sci-fi-looking developments in the medical space, I feel, is robotic-assisted surgery. And as farfetched as that once seemed, the technology exists today and has done for quite some time, thanks to Intuitive Surgical (NASDAQ:ISRG).
The firm’s Da Vinci robotic system is considered first-class in the medical community, with 7,135 machines already deployed worldwide. Intuitive has a razor-and-blade business model. It sells the machines at a low margin to improve affordability for new customers. But makes up the difference with consumable products needed for the devices to work.
This approach has resulted in impressive levels of cash flow and 30%+ operating margins. But despite being an industry leader, it’s far from risk-free. Robotic-assisted surgery is significantly less invasive and has a far shorter recovery time. But the problem is the cost.
This type of surgery is still prohibitively expensive for most people. And if the firm cannot make its systems cheaper without compromising margins, becoming a standard surgery option may never materialise. In this scenario, my investment may struggle to pay off.
That’s a risk I’m willing to take. And with shares down almost 30% in the last 12 months, I think Intuitive Surgical could be one of the best shares to buy today for my portfolio.
Patient monitoring is evolving
Performing surgery is step one. Step two is monitoring patients both in and out of the operating theatre. And that requires technology from a business like Masimo (NASDAQ:MASI).
The firm owns a vast portfolio of products that allow doctors and nurses to see exactly what’s going on with their patients. The list includes technologies such as pulse oximetry to monitor blood oxygen levels and brain monitoring systems for anaesthesiologists during surgery. It’s quite a speciality field. But it’s one that hospitals are enormously dependent on.
Once again, nothing is risk-free. And while the regulated healthcare sector creates substantial hurdles, there is a weakness in the revenue stream that could be problematic. Around 50% of top-line income stems from selling its products to just five group purchasing organisations (GPOs). If relationships break down with just one of these, it could significantly impact earnings.
Nevertheless, with a 40% share price discount in spite of delivering impressive results, I can’t help but feel these could be among the best shares to buy more of now for my portfolio.