The new Apple watch is unlikely to ever significantly affect the company’s profit margins, but the new health-related features do highlight an enormous investor opportunity in medical technology stocks.
A recent report from the U.K.’s Royal College of Nurses indicating a shortage of 40,000 nurses is only the latest sign that an aging population is stretching the capacity of developed world health care facilities.
Greater operating efficiencies through technology will almost certainly be implemented to alleviate the pressure on both doctors and, for Canada, government finances. The obvious example is the spread of remote monitoring devices so doctors are aware of risk factors like irregular heartbeats, without patients heading to the emergency department multiple times per month.
Stephanie Demko, Citi’s senior analyst in the health-care technology sector, estimates US$70-billion in new revenue for the industry if it merely implements technology to the extent the rest of the economy already does.
There have already been numerous success stories among health-care technology stocks, although specific stock risk remains extremely high. Teladoc Health Inc., for example, which offers medical treatment to U.S. consumers by telephone and video conferencing, has appreciated by 44.4 per cent per year for the past three years. HealthEquity Inc., which helps patients manage health care expenses, has seen their stock climb 47.5 per cent annually for the past 36 months.
Unlike most market sectors, rising demand for health care and health care efficiencies is virtually assured. The individual winners and losers are not yet clear, but it’s difficult to see any scenario where revenue growth in the industry isn’t well above the market average. A diversified, patient approach to medical technology stocks is among the most promising investor strategies for the long term.
-- Scott Barlow, Globe and Mail market strategist
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Stocks to ponder
Jamieson Wellness Inc. Since listing on the Toronto Stock Exchange in July 2017, the share price has soared 64 per cent and is up over 15 per cent year-to-date. Insiders have been adding to their positions. Last month, the company hiked its quarterly dividend by 12.5 per cent, offering investors a yield of 1.4 per cent. The stock has a unanimous buy recommendation from six analysts. Jennifer Dowty profiles the stock.
Dollarama Inc. The shares plunged 17.2 per cent on Thursday, marking their worst one-day decline since its initial public offering in 2009. Investors are now left wondering if the stock has become a tempting buying opportunity, or will continue to struggle amid a tough retailing environment. David Berman takes a look at what may be next for one of Canada’s favourite discount retailers.
The Rundown
Ontario’s Ford government is shamefully backing the investment industry over investors
After six years of consultations, provincial securities regulators issued proposals on Thursday to ban deferred sales charges on mutual funds (you pay a fee to sell a mutual fund within seven years of buying it) and stop online brokers from collecting advice-related commissions on mutual funds they sell to clients, Rob Carrick reports. Online brokers are strictly prohibited from providing any advice. In a statement Rob says could have been dictated by the mutual fund industry, Ontario Finance Minister Vic Fedeli said the province disagrees with regulators. Their approach results "from a process initiated under the previous government and, if implemented, will discontinue a payment option for purchasing mutual funds that has enabled Ontario families and investors to save toward retirement and other financial goals.” Please, says Rob. DSC exists because it pays a bigger upfront commission to the seller than other sales options, and a lesser continuing commission for service to the client. If you’re an adviser who puts an emphasis on short-term selling over long-term advice, DSC’s a winner. Read the full Carrick column.
Here’s the sector for investors to bet on for an emerging-markets rebound
A sharp rebound in emerging markets on Thursday should serve as a wake-up call to investors of opportunities that may exist right now in U.S. industrial stocks and some Canadian manufacturers, Scott Barlow writes. (for subscribers)
Others (for subscribers)
The week’s most oversold and overbought stocks on the TSX
Others (for everyone)
Eric Nuttall: Why I think these three energy stocks will double in price within a year
Number Crunchers (for subscribers)
Searching for stocks that offer strong dividends and downside protection
Ask Globe Investor
Question: Can you advise on emergency funds? It would be nice to have about $10,000 stowed away. However, I don’t like the idea of keeping it in cash. What are your thoughts on keeping it invested in a few large caps or ETFs with good downside protection? If a major emergency occurred, like a major market pullback, and I needed funds, would this be too risky? If so, what would you advise?
Answer: The key word here is “emergency”. That means you need the money immediately and it must be highly liquid and risk-free. That translates into cash. Even the most carefully constructed stock/ETF portfolio is not immune from a market crash. Look what happened in 2008. Everything in the market went down, including the blue chips. I understand you don’t want to hold cash. But if it’s a true emergency, that’s where you want your money.
--Gordon Pape
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What’s up in the days ahead
David Berman looks at what could be the best energy play for a recovery in Western Canadian oil prices.
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Compiled by Darcy Keith