Finding stocks with sound long-term futures can be challenging. After all, fashion and tastes inevitably change in the long run. This could mean that certain sectors and industries enjoy strong growth, only for it to peter out over time.
However, one industry which seems to offer upbeat growth potential for the long run is healthcare. It could benefit from an ageing world population, as well as a larger number of people on this planet in future years. With that in mind, these two companies could be worth buying today for the long term.
Reporting on Tuesday was advanced clinical-stage biopharmaceuticals company PureTech (LSE: PRTC). The company released a positive trading statement that sent its share price around 5% higher. It seems to be making good progress with its strategy, with positive clinical results from two pivotal stage affiliates that are now filing for FDA approval. This is expected to take place in the first half of the current financial year.
In the 2017 financial year, progress was made across the company’s advanced pipeline of seven clinical and seven pre-clinical programmes focused on the crosstalk and biological processes associated with the brain-immune-gut (BIG) axis. And with the recent IPO of its affiliate, resTORbio, having progressed as planned, the prospects for the company’s financial performance appear to be positive.
Certainly, PureTech is a relatively risky investment opportunity. It remains lossmaking and this situation could continue over the medium term. However, with the company having made strong progress with its pipeline, it could prove to be a highly rewarding stock for the long term. As such, it may be of interest to less risk-averse investors.
Also offering the prospect of capital growth within the healthcare industry is Smith & Nephew (LSE: SN). It offers a relatively diverse business model which has historically proven to be resilient. It has delivered more consistent growth than the boom/bust cycle of the pharmaceuticals industry, and this could mean that it is worthy of a higher valuation.
Looking ahead, the company is expected to report a rise in earnings of 4% in the current year, followed by additional growth of 7% next year. This shows that its strategy appears to be working well, and this could prompt a rapidly-rising dividend over the medium term.
In fact, Smith & Nephew is expected to increase dividends per share by around 14% in the next financial year. Although this puts the stock on a forward dividend yield of just 2.5%, dividend payments are due to be covered 2.4 times by profit.
With the stock being relatively mature, this suggests that there could be a fast-paced rise in shareholder payouts over the coming years. This would be unlikely to hurt its financial standing, with its cash flow and balance sheet strength indicating that it has the capacity to deliver sustained growth in the long term.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.