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2 ASX healthcare shares I’d buy for my portfolio

I think ASX healthcare shares could be good options to consider for most portfolios.

There are some great ASX growth shares that are delivering fast increases to their profit such as Pro Medicus Limited (ASX: PME) and ResMed Inc (ASX: RMD). While there are other defensive healthcare businesses with steadily growing profits and dividends like Ramsay Health Care Limited (ASX: RHC) and NIB Holdings Limited (ASX: NHF).

I believe most people would place their health above a lot of other types of spending such as retail or travel, so healthcare shares could be defensive picks. Health problems don’t come in cycles and there is substantial support from the government, so there’s potentially a lot to like about the sector. That’s why I have my eye on these two ASX healthcare shares:

CSL Limited (ASX: CSL)  

CSL might be the highest quality healthcare business on the ASX, perhaps one of the best overall.

The global biotherapies and influenza vaccine business regularly comes out with new products that aim to help keep people healthier and there is growing demand for its plasma products.

CSL spends hundreds of millions of dollars (in USD terms) on research and development each year, ensuring a continuing pipeline of future potential revenue streams.

CSL is trading at 33x FY20’s estimated earnings.

Paragon Care Ltd (ASX: PGC)

Paragon is a provider of medical equipment for acute, aged, primary, community and hospital care. Think of things like beds, surgery equipment, trolleys and privacy screens.

The company has been going through a rough time recently but may be about to get back on the right foot with the sale of its ‘legacy capital business’ for $4.5 million to Cabrini Health, which was a real drag on Paragon’s profit because it was actually making losses. The sale should hopefully mean the return to revenue & profit growth for Paragon in FY20 at higher profit margins.

It’s trading at 10x FY20’s estimated earnings.

Foolish takeaway

I’d want CSL in my portfolio because it’s such a high quality business – quality is worth holding through all economic cycles – and Paragon looks very cheap and has a path to growth from here. The ageing demographics should help them both over the coming years too.

Other strong businesses to consider alongside CSL are these top stocks.

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Tristan Harrison owns shares of Paragon Care Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended NIB Holdings Limited, Paragon Care Limited, Pro Medicus Ltd., Ramsay Health Care Limited, and ResMed Inc. 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.

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