I reckon UDG Healthcare(LSE: UDG) is a share that all investors need to pay close attention to today as, with global healthcare spending on the rise, I am confident the firm can deliver strong profits growth for many years ahead.
The FTSE 250 business provides a range of outsourced services to pharmaceutical and healthcare providers in more than 50 countries, and moves to broaden its operations through recent M&A action have given its profits outlook a significant boost.
City analysts are expecting earnings to leap 21% in the year to September, and by a further 11% next year. It is not hard to see why the number crunchers are so giddy in their assessments either, certainly if latest trading numbers are anything to go by.
Investing for future growth
UDG has spent a fortune on acquisition activity in recent times, the company having sealed six transactions at a total cost of $270m during the last fiscal year alone. Five of these were swallowed up by its core Ashfield arm, and they enhance the division's ability to offer services that span all stages of the product lifecycle.
And a robust balance sheet -- it has net debt of just $53.3m on the books -- means that additional earnings-boosting buys are likely just around the corner.
The Dublin business is also forking out huge sums on organic investment. At Ashfield it relocated its commercial and clinical operations to a brand new base in the US to allow it to continue expanding in this mega growth market, while it also opened new offices in Japan and Ireland. Meanwhile, its Sharp unit has invested in new facilities in the US and in South Wales to enhance its packaging and distribution capabilities.
Nowadays UDG is a major partner with the world's biggest drugs developers, and its earnings-driving Ashfield unit took part in eight of the top 10 product launches in the US last year. With a steady stream of new treatments from all over the pharma sector hitting the market, I am convinced the services specialist should continue to deliver robust sales growth.
As a consequence, I believe UDG is worthy of its lofty valuation, a forward P/E rating of 28.9 times.
Senior (LSE: SNR) is another FTSE 250 firm I am backing to record strong profits expansion now and in the future.
Indeed, its latest trading statement this week assured me of its strong outlook -- it advised that "order books across most of our businesses remain strong and we expect to see improved performance in both divisions," namely its Aerospace and Flexonics arms.
More specifically, I am particularly excited by the outlook for the firm's flying division as new programmes ramp up across the industry. Senior noted that production volumes for newer programmes on large commercial aircraft from both Boeing and Airbus have boosted business more recently.
City analysts are expecting Senior to deliver earnings growth of 8% and 17% in 2018 and 2019 respectively. And the prospect of excellent profits rises thereafter suggests to me that a forward P/E ratio of 19 times is worth swallowing to grab a slice of the action.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.