Health care stocks are focus of this week’s share tips columnists

Stockmarket specialists share their latest buy, hold and sell tips for investors, with a focus on health care companies.

Health care stocks have had a lacklustre run on the ASX since February.

Healthcare companies have had a bumpy ride on the stock market since the pandemic years of 2020 and 2021, and since early this year their share price performance has been lacklustre.

However, health features prominently in our experts’ share tips this week, particularly pathology, radiology and laboratory services group Sonic Healthcare.

Proving that stock picking is a subjective game, Sonic earned both a “buy” and a “sell” recommendation, while Ramsay Health Care also gets a mention.

Building-focused companies Dexus and Johns Lyng Group feature this week too, as do resources giants Santos and Iluka Resources.

Ord Minnett senior private wealth adviser Tony Paterno:

BUY

Santos (STO)

The medium-term prospects for Santos offer a compelling investment opportunity. The CEO appears resolute on keeping a tighter rein on growth expenditure.

Regal Partners (RPL)

The stock’s valuation is undemanding, along with an attractive fully franked dividend yield. Investment performance across core strategies remains excellent, and this should continue to drive new business flows and growth over the medium term.

HOLD

Coles Group (COL)

Cash generation remains robust, and we expect the strong margin performance will continue. Coles seems fairly valued at these levels.

Ramsay Health Care (RHC)

Its recent result saw a significant improvement in cash conversion. However, this was overshadowed by its outlook warning of a slowdown in patient activity growth and a sustained interest expense.

SELL

Sonic Healthcare (SHL)

Options for organic growth appear constrained given Sonic had already acquired $665m in revenue. Persistent cost pressures remain.

ASX (ASX)

The potential risks associated with multiple IT projects and a possible ASIC fine over ASX’s regulatory disclosures make the current price appear overvalued.

Baker Young managed portfolio analyst Toby Grimm:

BUY

Sonic Healthcare (SHL)

The pathology leader continues to deliver base business revenue growth, and cost cutting measures should begin to drive profitability from this year onwards.

Dexus (DXS)

Recent signals from the beleaguered office property market have been encouraging. Dexus is trading at a near 20 per cent discount to net tangible assets, with a solid yield. We see attractive medium-term upside.

Ord Minnett’s Tony Paterno

Baker Young’s Toby Grimm

HOLD

Iluka Resources (ILU)

Iluka remains high-quality exposure to an eventual recovery in Chinese housing, with a potential near-term catalyst of a funding agreement for its Eneabba Rare Earths project.

Audinate Group (AD8)

Weak 2025 sales guidance likely represents a delay, rather than fundamental de-rating, in the audiovisual software developer’s longer-term growth story.

SELL

Johns Lyng Group (JLG)

After delivering underwhelming results last month, uncertainty about strata management – a key strategic focus area – suggests risks remain tilted to the downside.

Suncorp Group (SUN)

While sale of the banking unit provides capital, it also means Suncorp is now fully exposed to insurance trends, where we see limited potential for improvement.

Originally published as Health care stocks are focus of this week’s share tips columnists