There are lots of businesses on the ASX. Some have defensive earnings and little growth, some have good growth prospects but aren't very defensive.
I think there are a small group of companies that offer defensive earnings and good growth at a reasonable price. Here are three of my favourites in that category:
Healthscope Ltd (ASX: HSO)
Healthscope is the second largest private hospital operator in Australia that has an impressive list of projects for new hospitals and extensions.
The ageing demographics of Australia should boost Healthscope significantly over the next two decades with more patients visiting its hospitals.
Healthscope is currently trading at 18x FY18's estimated earnings with an unfranked dividend yield of 3.49%.
TPG Telecom Ltd (ASX: TPM)
TPG Telecom is one of Australia's largest telecommunication companies. The NBN is changing the landscape for the traditional broadband sellers like TPG, Telstra Corporation Ltd (ASX: TLS) and Optus.
However, I think TPG's plans to start mobile networks in Singapore and Australia could be a good move as the future may be away from cables and in the spectrums instead.
TPG is currently trading at 14x FY18's estimated earnings with a grossed-up dividend yield of 3.88%.
Greencross Limited (ASX: GXL)
Greencross is the pet giant of Australia with its vets and retail stores.
People are more willing to pay for pet toys and the vet than they ever have been, particularly with the uptake of pet insurance helping pay for expensive vet treatments.
Greencross' tactic of co-locating a vet inside a Petbarn is a great way to cross-sell to both customer bases and decrease costs too.
It's currently trading at 13x FY18's estimated earnings with a grossed-up dividend yield of 4.62%.
Foolish takeaway
I think all three businesses are worthy of being in a portfolio due to their growth and defensive qualities. Out of the three, I think Healthscope has the best potential when looking at a time period of five years or longer when all of its projects are fully completed.
