I have written repeatedly in the past about why any smart ASX investor should have some moderate exposure to the best healthcare shares on the local bourse.

Healthcare businesses have the powerful tailwinds of ever-increasing public healthcare budgets and ageing populations.

Back in May 2014 and again in January 2015 I nominated CSL Limited (ASX: CSL), Ramsay Health Care Limited (ASX: RHC) and ResMed Inc. (CHESS) (ASX: RMD) as probably the three best to buy relative to valuations and long-term outlooks.

Since May 2014, CSL is up around 50%, Ramsay up around 47%, and ResMed up around 47% excluding dividends paid along the way.

These are handy returns for investors who recognised the opportunity to buy three market-leading businesses with strong margins, bulletproof revenue growth, overseas exposure, and positive long-term outlooks.

I wrote more extensively in the prior articles about what should make them attractive to investors and am happy to add Cochlear Limited (ASX: COH) as another quality healthcare company to the above trio that long-term oriented investors should look to buy.

Cochlear has a powerful brand, market-leading hearing aid products and huge underlying demand for its products. The company just posted some excellent interim profit results and unsurprisingly the stock has been on a sound growth trajectory, up 21% over the last six months.

Looking to get exposure to these four stocks as part of a balanced portfolio is frankly a no brainer and eliminates the need to look to smaller more speculative healthcare businesses.

Of course it’s no use paying any price however, as returns will always be a function of price paid no matter how high quality a business is. So investors must always pay attention to….

Valuation

According to forecasts provided by Commsec:

  • At $102.62 Cochlear currently trades on an estimated forward price earnings around 32x
  • At $65.79 Ramsay Healthcare trades on an estimated forward price earnings around 28x
  • At $104.54 CSL trades on an estimated forward price earnings around 29x
  • At $7.89 ResMed trades on an estimated forward price earnings around 25x

Admittedly, all of the above businesses look on the expensive side.

However, the best businesses always do and given current valuations I would prefer ResMed as the best bet to outperform from here. Especially given its recent selloff may only be temporary after a bounce in the Australian dollar that may not be sustained throughout the rest of the year.

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Motley Fool contributor Tom Richardson owns shares of ResMed Inc..

You can find Tom on Twitter @tommyr345

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.