The aren’t many businesses in the ASX 50 that I would consider buying for my portfolio. Most of them are either cyclical or have hit a growth ceiling – that’s no good to me.
But, there are a few in there that I’m attracted to for my portfolio, such as these:
Ramsay Health Care Limited (ASX: RHC)
Ramsay is the largest private hospital operator in Australia and one of the largest in the world.
I like that it is a diversified play on the general healthcare industry across all the different ailments. I also like that it is investing large sums of money for future growth – it seems to be the norm to invest over $100 million a year into new or expansion projects.
A new purchasing supply chain joint venture could also be very profitable and useful in the years ahead. For now it’s not material to Ramsay.
Ramsay is exposed to the ageing tailwinds of Australia and the other countries it operates in. This should provide decent defensive returns over the next decade or two, particularly if the Government can’t afford public health.
It’s currently trading at 19x FY19’s estimated earnings.
CSL Limited (ASX: CSL)
CSL has been one of the best ASX shares to own over the past decade with its share price up over 430% to the current $203.
It always has an impressive research & development process going on. The company itself is investing for long-term growth because it takes several years to develop the next treatment, which is why this is a good business to hold for the long-term.
There will always be something else to cure, so our healthcare giant can likely expect continued strong profit growth over the long-term.
Its products also have little to do with economic cycles, so it’s quite defensive.
It’s currently trading at 34x FY19’s estimated earnings.
Cochlear Limited (ASX: COH)
The hearing device company has a lot great attributes to it. The business has a strong brand name with consumers. When it makes a sale it could be making a customer for life. It’s also growing recurring revenue.
There’s supposedly a largely untapped market around the world, particularly as ‘emerging’ countries have now emerged and now have large middle-class populations.
Cochlear just keeps growing each year and is compounding wealth very nicely for shareholders.
It’s currently trading at 42x FY19’s estimated earnings.
Which to buy?
But, whilst I want to buy them I don’t feel that I can justify a purchase right now in any of them.
Ramsay is coming up against a significant slowdown across its business segments in Australia, the UK and France. The share price may drop to $50 or lower if conditions don’t turn around soon. Growth of ‘up to’ 2% this year doesn’t sound great.
Cochlear is trading very expensively for a business that only grew at 10% last year, its share price may have to drop by a third or more for me to consider it decent value, unless it picks up growth.
CSL looks the most attractively valued, but even so it doesn’t strike me as good value today. Rising interest rates could hamper its valuation in the short-term.
Essentially, I don’t think any of them are currently buys, but I would buy them in the future if they’re better priced.
Instead, if I’m going for growth I may as well think big and go for this exciting growth share which could completely change Australia.
Discover why this legendary Australian stock-picker just issued a “Double Down” buy alert to his exclusive group of insiders… and why he’s convinced this might be the single most attractive entry point for years to come.
Motley Fool contributor Tristan Harrison owns shares of Ramsay Health Care Limited. The Motley Fool Australia has recommended Cochlear Ltd. and Ramsay Health Care Limited. 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 Scott Phillips.