Over the long term the best businesses are those that are managed well, have strong brands and excellent financial results.
For reliable results it's better to look within the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), rather than smaller businesses.
The following four stocks are some of the best businesses on the ASX in my opinion and should be in a Foolish portfolio if they aren't already:
Seek Limited (ASX: SEK)
Seek is Australia's largest jobs portal website, with a growing presence in many other countries too. Its overseas investments in market leading jobs portals mean it has a great chance of outperforming the market as more job advertising becomes digital.
In FY16 Seek grew revenue by 11%, net profit after tax by 27% and its dividend by 11%. Seek is trading at 24.4x FY17's estimated earnings with a grossed up dividend yield of 3.78%.
REA Group Limited (ASX: REA)
REA Group is the owner of Australia's market leading real estate site realestate.com.au as well as several other Australia sites. It's also growing in other areas like the USA and South East Asia which could drive growth over the next few years.
REA Group grew revenue by 20%, earnings per share by 16% and the dividend by 16% in FY16. It's currently trading at 30.3x FY17's estimated earnings with a grossed up dividend yield of 2.01%.
Healthscope Ltd (ASX: HSO)
Healthscope is Australia's second-largest private hospital operator. It recently updated the market to say that the number of patients in the first quarter of FY17 hadn't grown compared to FY16. Its share price is down by 21% since that announcement.
With Australia's inevitable aging populating and the increasing cost of healthcare to the Government budget there is a need for private hospitals. It's very likely Healthscope will recover once patient numbers are rising again.
Healthscope is trading at 20.2x FY17's estimated earnings with a dividend yield of 3.19%.
Bapcor Ltd (ASX: BAP)
Bapcor is one of Australia's largest auto parts distributors. It could be classed as a potentially recession proof business because car owners are more likely to hang onto their car during tougher times and replace parts as opposed to just upgrading to a new car.
In FY16 Bapcor grew revenue by 82.7%, earnings per share by 31% and its dividend by 26.4%. It's currently trading at 33x FY16's earnings with a grossed up dividend yield of 2.63%.
Foolish takeaway
All four of these stocks are compelling buys, particularly at their current prices and are worthy of a place in your portfolio. However if I had to narrow it down to two, I'd pick Healthscope and REA Group. If you're after even more great businesses to invest in then I strongly recommend reading this.
