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2 great defensive shares for growth investors

Finding the market’s best growth shares is a tricky business. Small caps offer the most potential for growth, but hunting for opportunities in this area of the market can be tricky. You’re more likely to end up with a dog than picking the next Apple

With this being the case, for many investors who just don’t have the time to pick the best small caps, defensive growth stocks may be a better bet. 

The likes of Prudential (LSE: PRU) and Intertek Group (LSE: ITRK) are both excellent examples of such businesses. Indeed, both of these companies offer steady growth at a reasonable price, but they’re also multi-billion pound companies. Put simply, by investing in both of these companies you can gain access to market leading growth with minimal risk. 

Asian expansion 

Prudential’s growth has exploded over the past few years thanks to the company’s focus on Asia. By expanding into Asia, the company has been able to profit from the rising wealth of the Asian middle classes, who are increasingly looking for wealth management and insurance products. 

Earlier this week the company reported yet anther year of impressive growth. For full-year 2016, IFRS operating profit grew 7% to £4.3bn, beating the consensus forecast of £4.1bn. Asia IFRS profit rose a staggering 15% at constant currency. 

Analysts expect this growth to continue into 2017 and 2018. For 2017, the City has pencilled-in earnings per share growth of 14% and for the year after, growth of 8% is expected. If the company hits these targets, earnings per share will have doubled in the space of seven years. This may not seem like much, but for a £45bn company like Prudential, this growth rate is nothing short of impressive. 

However, despite this impressive growth, the shares are only trading at a forward P/E of 12.1. 

Slow and steady 

Intertek is a multinational inspection, product testing, and certification company, which isn’t a glamorous business, but it’s one business that won’t see a sudden drop-off in demand overnight. 

Testing and certification are critical activities, and only the most experienced and reputable companies can bid on business. This means Intertek has a huge advantage over any smaller companies and its position in the market almost guarantees a steady flow of business. For the next two years, analysts are forecasting earnings per share growth of 15%. If Intertek hits these targets, then over a period of seven years, earnings per share will have grown by 47%. 

Shares in Intertek currently trade at a forward P/E of 19.7, which may look expensive but considering the company’s position in the market and steady growth, that is a multiple worth paying. If Intertek continues to grow earnings at a high single-digit rate for the foreseeable future, assuming the valuation remains the same, investors can expect a capital return of 6% to 9% per annum excluding dividends. The shares currently support a yield of 1.8%.  

Small-cap growth opportunity? 

If you're interested in a potentially more lucrative opportunity than Prudential and Intertek, I strongly recommend you check out this free report.

The report details one growth stock our analysts believe could have an upside of as much as 50%. The opportunity is detailed in the report, which gives a rundown of our investment thesis. 

But you need to be quick as this opportunity won't be around for long.

Rupert Hargreaves owns shares of Prudential. The Motley Fool UK has recommended Intertek. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.