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Alongside GlaxoSmithKline and AstraZeneca, I’d invest in this healthcare share

Just like many other investors, I’m working hard right now shopping for shares.

Market plunges like this one don’t come around very often. When they do, I’m keen to take advantage of opportunities that may arise.

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Part of my approach involves reading the most recent news releases from the companies behind the stocks that interest me. One example is today’s full-year results report from Cello Health (LSE: CLL).

A defensive sector

My starting point for focusing on the company is that I’m keen on the health sector. Within it, we can often find companies with stable businesses experiencing steady demand that leads to consistent and often growing cash flow.

Well-known big-caps such as GlaxoSmithKline and AstraZeneca have a permanent place on my watch list. But so do smaller companies such as Alliance Pharma and Vectura. And Cello Health? It operates on the edges of the general healthcare sector because it earns its living as a healthcare-focused advisory business.

When it comes to analysing any stock right now, I reckon there’s only one place to start. To me, historical records of trading and finances are secondary to what the firm has to say about the outlook. Specifically, I want to hear how the directors reckon the coronavirus pandemic is likely to affect operations.

Cello Health’s chief executive Mark Scott said in today’s report the company is “conscious” of the uncertainty created by the COVID-19 virus. It’s also taking “appropriate cautionary measures” to mitigate any impact on the business. However, he’s “confident” of the firm’s long-term growth opportunity in the healthcare services arena.

Meanwhile, non-executive chairman Chris Jones added that it has “become clear” that the world economy will go through a period of “considerable” stress because of the virus. He reckons it’s possible that trade may be disrupted from “certain” clients “while the current travel restrictions and health risks exist.” But reassuringly, he thinks the client base is “dominated” by those that are “less sensitive” to short-term changes in consumer behaviour.

The outlook is cautiously positive

So far, Jones reckons the company has not experienced any material client impact arising from the disruption. And he said Cello Health is mitigating the threat by using technology to allow digital delivery of projects, and by flexible working patterns across the office network. Overall, the directors are “confident” about the strength of the business and the capacity of the management team to “trade effectively” through the near-term challenges

The company reported some decent full-year figures today. Revenue rose almost 7% compared to the prior year. And earnings per share from continuing operations shot up just over 35%. The directors slapped 6.5% on the full-year dividend, which I reckon backs-up their conservatively optimistic narrative.

At 65p, the share price has adjusted down by more than 30% since the end of January. But it’s perky today. Meanwhile, the forward-looking earnings multiple for 2020 sits just below 12. I think the stock is attractive.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Alliance Pharma and AstraZeneca. 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.