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Should you buy this healthcare giant as FY earnings jump 60%?

Acquisitions and solid organic growth were a boon for Middle Eastern hospital provider NMC Health (LSE: NMC) in 2016 as revenue rose 38.6% year-on-year and EBITDA jumped 63.7%. This continues a solid run of success for the group and its shares have nearly doubled in the past year alone. But for those who have missed out on this rally, is now the time to begin a position?

The good news is that NMC, as the UAE’s largest private healthcare provider, is showing it can still grow despite the weak oil prices that have roiled the region. Offering top-notch care has been popular with customers in the country and total patient numbers rose 34.5% during the year while occupancy rates rose 80 basis points to 74.3%.

And these customers are highly profitable. Average revenue per patient rose 28.3% year-on-year and together with higher occupancy rates pushed EBITDA margins from the healthcare division up from 26.5% to 29.3%. This level of growth looks entirely sustainable as government health insurance requirements increase the potential pool of patients and the UAE’s economy continues to grow a solid 2%-3% per annum, despite low crude prices.

Would-be investors should also like that management has a laser-like focus on profitability and increased cash flow from $84.1m to $176.4m during the year. This helped push net debt down to 1.75 times EBITDA at $431m. With the balance sheet improving and small acquisitions in Saudi Arabia performing well, investors can also expect further expansion into similarly wealthy Gulf countries in the future.

The downside is that all this growth means lots of other investors have rushed to buy shares of the company, which now trade at 31 times forward earnings. This is a hefty premium, but if NMC can continue to post double-digit revenue and earnings growth, investors may find it a bargain.

A growth star closer to home

A similarly fast growing healthcare stock with broader appeal is healthcare specialist Advanced Medical Solutions (LSE: AMS). Shares of this tiny £480m market cap company have risen over 140% in the past five years as its wound care products have struck a cord with NHS doctors and their cost-conscious budget directors alike.

After finding success selling its wound closure and adhesive products at home and in Europe the company has recently made a major move into the massive American healthcare market. So far this is working out stupendously and an 83% leap in sales of its Liquiband product in the US in H1 helped boost overall group revenue 20% to £39.2m.

Liquiband has been an immense hit in the US and is already nearing management’s target of 20% market share. The company is now focused on increasing the range of products it offers in the US and if they’re as successful as Liquiband investors will be in for a treat.

With £41.1m in net cash, impressive operating margins of 24.3% and plenty of growth opportunities, AMS is a share to follow closely despite trading at a pricey 30.6 times forward earnings.

But is AMS the best growth stock you can buy today?

Well, the Motley Fool's Head of Investing thinks he's found an even better opportunity in his Top Growth Share of 2017, which has rocketed in value over 250% in the past five years alone. And with international expansion just beginning, he believes this founder-led stock could triple again in the coming decade.

To read your free, no obligation copy of his report, simply follow this link.

Ian Pierce has no position in any shares mentioned. The Motley Fool UK has recommended Advanced Medical Solutions. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.