Healthscope over the last 8 years have been a spectacular performer. I do however question whether they can continue this performance. The conventional wisdom is that everyone needs healthcare, even in recessions, and no one cares about costs when it comes to costs, but I want to offer a number of counter-arguments.1. No one wants to be a nurse in a hospital, so its hard to find staff, and still harder to pay enough to keep them, particularly where there is higher wages overseas.
2. All costs are rising
3. Service outsourcing is becoming more common. We will see more patients going overseas for treatment.
4. Health remains a highly regulated area, and I think people are more likely to cut back on private insurance. Its true successive governments have shown their support by propping up the private system. But given the quality of public health, and the choice of overseas treatment, I suspect healthcare will seem less alluring than indicated.
I thus will be looking to see whether this stock will break the $5.00 support, or whether it continues its uptrend. More information at Google Finance and see my discussion forum.
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Andrew Sheldon www.sheldonthinks.com
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