3 Companies Poised To Flourish As Australia Ages
It is now common knowledge not only amongst demographers and statisticians, but also amidst investors and fund managers that Australia’s population is ageing. With this ageing population comes a shift in demand for goods and services. This will provide an opportunity for three companies in particular to experience a sustained period of substantial growth.
1)Somnomed Limited (SOM)
Somnomed is a company poised to enjoy a fruitful period of growth that will only be accelerated by the demographic changes occurring in Australia. Somnomed operates in Continuous Open Airway Therapy which will become more significant as the elderly population grows larger and develops health issues like sleep apnoea. Somnomed is positioned most proficiently in this market as it offers oral and dental solutions whereas its competitors offer outdated and expensive machines that monitor and regulate sleep. However, Somnomed not only has an advantage on a technical level but also on a fundamental level. Upon basic fundamental analysis Somnomed seems like a growth stocks that is the product of imagination with a TTM P/E ratio of 255.56, 70% earnings growth over 2 years, a 19:7 Asset to Debt ratio and no dividend payments. With all these forces acting in Somnomed’s favour they may just have the potential to grow to a point where they can become the next ResMed (RMD).
2)Cochlear Limited (COH)
Without a doubt the single biggest driver of Cochlear’s sales is the age of the population and with that figure heading north, it is safe to assume Cochlear’s revenue will follow. However with external influences on the business acting in their favour their management must assure they can maintain their competitive advantage (Which they seem to be doing upon announcements of increased R&D expenditure) and grow their market share as much of the patent protection they had relied upon loses relevance.
3)Challenger Limited (CGF)
Challenger is another company whose products appeal primarily to the retired population. In general older people are not willing to take the same financial risks ask younger people as they have no substantial source of income outside of the pension payments. Furthermore the aged population may be forced to look towards creating additional income streams as the government shifts towards self-sufficient retirees with a strong focus on superannuation. This is where Challengers products come into play. Challengers Annuities directly satisfy these emerging needs of the elderly population as they offer a secure financial product that generates a stable second source of income.