If you're "over the market volatility", it may be time to buy blue-chip ASX 200 shares that won't deliver spectacular returns over the short term but will deliver reliable earnings and growth over the long term.
That's the advice of Motley Fool Australia's chief investment officer, Scott Phillips, who chatted with Gemma Dale on nabtrade's Your Wealth podcast yesterday.
Phillips nominated two ASX healthcare shares with "multi-decade runways" for growth based on long-term social trends. Both are large-cap shares in the S&P/ASX 200 Index (ASX: XJO).
The 'long-term winners' for growth this year
Phillips said the economy is in a state of flux and no one really knows what's going to happen next.
In such tumultuous times, he reckons "long-term winners are really, really, really attractive" because they offer earnings stability and good growth prospects.
Phillips said:
… if you can do moderately well for a very long period of time as an investor, you'll do very well overall.
And if you can buy businesses that are in that space that just continue to compound away, grind away and just get bigger and bigger and bigger, and more and more successful over time, I think that's an opportunity there.
Which two ASX 200 shares should you buy?
The two ASX 200 shares Phillips recommends are Cochlear Limited (ASX: COH) and Resmed CDI (ASX: RMD).
Phillips likes these ASX 200 shares because the world is getting older and fatter, and these companies are the market leaders in their respective fields of helping people hear and helping them sleep.
Why buy Cochlear shares?
Cochlear is the world's leading hearing implant device manufacturer. Its implants are the standard of care for children with severe or profound hearing loss. The company also sells products to seniors once their normal hearing aids are no longer effective.
Phillips said:
It's a medically diagnosed condition [and] Cochlear is the leader in this space. They are in a business that is going to have more and more people diagnosed over time because medical science gets better, the world is becoming more affluent so the developing worlds … will be able to afford some of this technology … and if you're a Cochlear customer, you're a Cochlear customer effectively for life — it's an implanted device.
Why buy Resmed shares?
Resmed is a global leader in sleep technology. It develops, manufactures, and distributes medical devices such as CPAP masks, and cloud-based software applications that diagnose, treat, and manage a range of respiratory disorders. These include sleep apnoea, which is common among obesity sufferers, and chronic obstructive pulmonary disease (COPD).
Phillips said:
… sleep apnoea is a continuing issue, the world is getting fatter, we're getting older, the growth in the diagnosis of sleep apnoea continues to be huge, so these are companies I think with literally multi decade runways.
They're not going to be spectacular growth, they're not going to give you Afterpay-like returns over six or 18 months but these are just great businesses that I think have a really great long term future.
Phillips said as the market leaders, the two ASX 200 companies had excellent prospects for revenue growth, which bodes well for share price appreciation.
He said: "As long as you remain the brand of choice, that's a pretty good way to keep that cash rolling."
Also during the interview, Phillips discussed what investors could do to set their portfolios up for success in today's difficult economic environment.
