The share market can be a very volatile beast. When a recession hits earnings and share prices can quickly plummet. There is no truly safe share but there are some businesses where the profit and share price may be more insulated. Here are three of my favourite defensive ideas: Ramsay Health Care Limited (ASX: RHC) Ramsay is one of the largest private hospital operators in the world. It has major operations in Australia, France and the UK. It also has small operations in a few other countries. I think hospitals are a great place to be invested in because…
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The share market can be a very volatile beast. When a recession hits earnings and share prices can quickly plummet.
There is no truly safe share but there are some businesses where the profit and share price may be more insulated.
Here are three of my favourite defensive ideas:
Ramsay Health Care Limited (ASX: RHC)
Ramsay is one of the largest private hospital operators in the world. It has major operations in Australia, France and the UK. It also has small operations in a few other countries.
I think hospitals are a great place to be invested in because of how consistent their earnings are. Patients don’t choose to get sick or injured based on economic cycles. Patient numbers are generally consistent year to year.
Ramsay has a good growth profile because of the ageing population of Australia. The older people become the more likely they are to need to visit a hospital.
It’s currently trading at 22x FY18’s estimated earnings.
InvoCare Limited (ASX: IVC)
InvoCare is Australia’s largest funeral provider with a market share of around a third.
I like InvoCare because sadly a certain number of people will need a funeral each year and InvoCare gets a good percentage of these funds with its numerous brands like White Lady, Simplicity Funerals and Value Cremations.
The death rate is expected to increase at a faster rate each year for the next two decades, which could be a big boost to InvoCare during this time.
It’s currently trading at 28x FY18’s estimated earnings.
Transurban Group (ASX: TCL)
Transurban is Australia’s large toll road operator. It operates many toll roads in Melbourne, Sydney and Brisbane. It’s also expanding its operations in the USA.
People will always appreciate the time-saving option of Transurban’s roads, which is why it’s been such a solid investment over the past five years.
Transurban is currently trading at 62x FY18’s estimated earnings.
All three businesses are high quality businesses. However, InvoCare and Transurban are both trading expensively, so I’d avoid them at this stage.
Ramsay’s share price fall has made it look very attractive to me, so I think long-term investors would be wise to consider buying.
If Ramsay isn't for you then our top growth shares for 2017 could be exactly what you're after.
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Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited and Ramsay Health Care Limited. 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.