4 companies with strong demand

True defensive stocks won't stumble over government policies.

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With all the talk recently about US government shutdowns, tapering of monetary policy and housing bubbles, it's easy to forget that most government policies will have little or no effect on companies that provide services required in every day life. Berkshire Hathaway Chairman and CEO Warren Buffett's famous mantra is to purchase shares in companies that you would be happy owning if the market shut down for 10 years.

With this is mind, below are four companies that are currently important to many Australians, and should continue to be for years to come.

Seek (ASX: SEK) owns the dominant Australian online job advertisement site Seek.com.au, and has started to diversify the business by investing in similar companies throughout Asia, Brazil and Mexico. Seek.com.au currently captures over 80% of all Australian online job search time, and does not appear to be losing market share to its domestic competitors. Unemployment has been ticking up lately, meaning there are more people out there looking on Seek.com.au for jobs.

Sonic Health Care (ASX: SHL) offers diagnostic services to medical facilities all around the world. It has a market leading position in eight, mainly developed, countries. Sonic is poised to benefit from aging populations in all of those as it will increase demand for medical services over time. Sonic has grown strongly through acquisitions and now plans to slow down now in order to fully realize the synergies in integrating the businesses. This should increase margins and the share price over the medium term.

G8 Education (ASX: GEM) owns and operates childcare centers in Australia and Singapore. With the Australian population increasing naturally and due to migration, demand for childcare places is likely to remain strong over the medium term. G8 has learnt from the failure of rival ABC Learning Centers in the aftermath of the GFC and is expanding sensibly, purchasing only quality centers at attractive prices.

Sleep apnea device-maker Resmed (ASX: RMD) is another medical company likely to benefit from the aging population. In August it recorded its 74th consecutive quarter of revenue growth — an 11% rise despite challenging market conditions. Margins expanded nicely and with around 95% of revenue coming from outside Australia, it stands to be a major beneficiary of a weaker Australian dollar. With most revenue coming from developed countries and an estimated 12 million Americans suffering from sleep apnea, Resmed potentially has a huge market to tap.

Foolish takeaway

Investors should always consider the quality of the company first, then the effect that legislation and government policies may have. Targeting quality businesses with dominant market positions in industries required by most of the population is a sensible way of investing in the uncertain times we face at the moment.

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Motley Fool contributor Andrew Mudie owns shares in G8 Education.

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