Are Ramsay Health Care Limited shares too cheap to ignore?

On Friday the Ramsay Health Care Limited (ASX: RHC) share price continued its disappointing decline and finished the day just six cents above its 52-week low.

This brought the private hospital operator’s 12-month decline to almost 20%.

Is now the time to snap up shares?

Whilst there’s no guarantee that Ramsay’s shares have found a bottom, I believe that patient buy and hold investors could do very well with an investment at the current share price.

Although core earnings per share is expected to grow just 8% to 10% in FY 2018, I feel the tailwinds of ageing populations globally and increased chronic disease burden means that Ramsay is in a position to deliver stronger levels of organic growth over the next decade.

Especially considering its global footprint now extends to 25,000 hospital beds and 1,150 operating theatres across its 221 hospitals and 13 health care and treatment facilities.

Furthermore, acquisition opportunities and greenfield and brownfield expansions could provide the company with options to bolster this growth inorganically.

And finally, as the company generates approximately 46% of its revenue outside Australia, if and when the Australian dollar finally weakens, Ramsay is well placed to benefit from favourable currency movements.

So with its shares trading at just 24x estimated forward earnings, I think Ramsay is great value at the moment and would recommend it ahead of Healthscope Ltd (ASX: HSO) and Primary Health Care Limited (ASX: PRY).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.


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