There’s no doubt about it: if given the choice of stashing my hard-earned investment funds into a cash ISA, or using those funds to buy FTSE 100 stock NMC Health (LSE: NMC), there really is no contest.
I’ve long complained about the pitiful interest rates on offer from even the best-paying easy access cash ISAs, and a lack of movement from Britain’s building societies and banks in recent weeks means that the most lucrative rate still sits below 1.5%.
I’m setting myself up for being call a hypocrite by championing NMC as a better investment destination today given that its forward dividend yield sits at a meagre 0.6%. And of course cash sat in a savings account is theoretically in much less peril than money that’s invested in stock markets, and particularly so in times of huge volatility like these.
Stunning share price growth
I’m prepared to look past this modest near-term yield, though, and concentrate instead on the healthcare play’s brilliant growth prospects.
As I said, investing in shares is considered a riskier bet than locking your dough away in a cash account, and I’m not going to dispute this. What I would argue, though, is that NMC’s defensive operations — it is one of the Middle East’s biggest healthcare providers — make it less susceptible to share price jerks than much of the broader market.
Sure, its market value has taken a smack since the summer but over the long-term, it’s proved to be one of the London Stock Exchange’s big success stories — despite that aforementioned pullback its stock price has still surged an astonishing 620% over the past five years.
And from its latest trading statement I can deduce that NMC’s share price should recover from this more recent blip and continue soaring.
Earlier this week the medical mammoth reiterated its revenues growth guidance for 2018 of around 24%, and for EBITDA to expand 36% year-on-year to $480m. And it predicts that strong performances should extend beyond the current period — NMC anticipates sales growth of between 22% and 24% in 2019 and an earnings rise ranging from 18% to 20%.
And why wouldn’t the Footsie firm be so upbeat? NMC continues to expand aggressively across its target markets in the United Arab Emirates, a region in which it is the sole private healthcare play in six of the seven states therein.
And trading conditions in these regions are steadily improving. In its trading statement the FTSE 100 company made specific reference to the steady roll out of medical insurance coverage in its core markets and the contribution that it is making to the group’s profits generation.
City analysts expect group earnings to rise 31% in 2018 and by a further 30% in 2019, and I’m confident that the rising financial might of its key emerging markets should keep the bottom line swelling. I think that NMC’s a brilliant growth share to pick up today and hold for many years to come, and particularly given that it trades on a dirt-cheap , sub-1 PEG ratio of 0.9 right now.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended NMC Health. 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.