The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) lost its momentum late in August to record a fall of 2.2%.

Interestingly, despite the subdued performance of the index, many investors (myself included) consider many stocks to be close to fully valued which makes picking stocks increasingly difficult.

If you share this view that the market is looking expensive, then you’re no doubt focussed on owning high-quality shares that offer the best protection against downside risks.

Below are three blue chips that I’d consider buying right now based on the following defensive criteria.

  • I’m confident their shares are relatively attractively priced
  • They each hold industry-leading positions and have appealing business models
  • Sound balance sheets
  • Exhibiting positive earnings growth potential

Amcor Limited (ASX: AMC) is a world leading manufacturer of packing solutions. With end markets for the group’s products primarily in defensive sectors such as food, beverage and health care, Amcor certainly appears to meet the criteria of industry leading and defensive.

Amcor’s recently released full year financial results highlight the high quality nature of the group’s business operations. For the 12 months ending June 30, Amcor reported an outstanding return on average funds employed of 21.6% with constant current revenue and profit growth of 3.7% and 7.5% respectively.

Amcor is very well positioned for continued growth too, with management issuing an outlook statement for higher constant currency earnings in FY 2017.

Brambles Limited (ASX: BXB) holds a commanding position in the ostensibly unsexy industry of wooden pallets.

Through a combination of superior logistics and positive feedback loops, Brambles has become a global leader in providing pallet pooling services to many of the world’s largest fast moving consumer goods businesses.

This extensive customer base and wide geographical reach provides a strong defensive element to the group’s earnings.

Brambles’ robust operating model was on display when the company reported an adjusted return on capital invested of 17.2% and an operating margin of 16.5% for FY 2016.

Despite Brambles’ size, the group continues to achieve impressive growth rates. This was borne out in the company’s recent full year results which showed constant currency growth in sales and underlying profit of 8% and 9% respectively.

Importantly, this impressive rate of growth is set to continue with guidance from management for constant currency sales revenue growth in the range of 7% to 9% and underlying profit growth of between 9% and 11%.

CSL Limited (ASX: CSL) is a world leading biopharmaceutical manufacturer of therapies and vaccines that treat and prevent a range of debilitating diseases and disorders.

The life-saving nature of CSL’s therapies not only mean that its products are highly sought after but also that its business is relatively immune to the general economic climate. These factors in turn provide the company with a defensive stream of revenue.

CSL’s profit margin for FY2016 was a healthy 20%, which highlights the attractive economics of its business operations.

Having achieved underlying revenue growth and underlying profit growth of 8% and 5% respectively (in constant currency terms) for FY 2016, investors could be forgiven for thinking that CSL is “ex-growth”. That assumption should prove false however with management providing profit growth guidance of 11% for FY 2017.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. 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.