Ageing population stocks are set to derive significant long-term value

Nick Sundich Nick Sundich, February 27, 2023

Ageing population stocks represent among the best long-term opportunities that exist for investors.

Over the next 25 years, the world’s population of people over 60 will double.

Looking specifically at Australia, the population of people aged 65-84 will more than double and the population of over 85s are expected to quadruple.

There are a few sectors that are set to benefit from these trends, selling products to these peoples.

 

 

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Ageing population stocks mostly include health companies

We see two particular categories of companies that could be considered ‘ageing population stocks’.

 

1. Health stocks

Pharmaceutical stocks could benefit from increased long-term demand as a result of an ageing population, given older individuals requiring more prescription medications than younger people.

Drug makers may also benefit from pharmaceuticals being a large component of government health expenditures for older citizens, as certain countries have programs in place to subsidize medication costs for seniors.

Of course, some ageing population stocks will benefit more than others dependant on what conditions the drug makers or pharmaceutical stocks are targeting.

One group of stocks that might benefit are pathology stocks, which provide diagnostics services for many conditions. There are three such companies on the ASX right now: Sonic Healthcare (ASX:SHL), Australian Clinical Labs (ASX:ACL) and Healius (ASX:HLS).

Turning to companies developing treatments for specific conditions, we see particular opportunities in companies targeting arthritis, of which Paradigm Biopharmaceuticals (ASX:PAR) is one.

ASX stalwart Cochlear (ASX:COH), which develops and sells hearing aids, is another company set to benefit from an ageing population.

Ramsay Healthcare (ASX:RHC) is another ASX giant that could be an ageing population stock, given it runs various health services including rehabilitation hospitals.

 

2. Aged care providers

Aged care providers are another category of ‘ageing population stocks’ for investors to consider.

This includes companies that operate aged care facilities or offer support services such as nursing aides or transportation services for seniors, enabling them to continue living independently.

These businesses may experience higher profits as they become increasingly necessary for those who need these services.

Furthermore, government subsidies may be available to help pay for these types of services, thereby ensuring cost is not a concern.

There are only a handful of aged care stocks on the ASX, however. One of these is Estia Health (ASX:EHE) and another is Japara Healthcare (ASX:JHC).

There are also a handful of companies offering independent retirement villages including Summerset (ASX:SNZ) and Lifestyle Communities (ASX:LIC).

 

How to pick the right ageing population stocks

Overall, it is important for investors looking at opportunities arising from an ageing population to consider various sectors and understand how each company plans to capitalize on the growing needs of elderly individuals.

Additionally, it is crucial to research any potential incentives or cuts that governments may implement when dealing with issues related to seniors. This may either benefit or hinder specific ageing population stocks.

But in the end, there will be companies that will benefit from the ageing population.

And taking into account all these factors can help investors find companies will benefit from this demographic shift.

 

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