Solidify your portfolio with these 3 stocks

Fear has gripped the markets, but blue chip stocks can help steady the situation.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Aside from a sharp fall between May and June and another in December, the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) experienced little volatility in 2013 with investors recognising some fantastic gains. However, while investors' hopes were high for another strong year in 2014, January brought disappointment and even fear of what is to come.

Global markets have been rocked by the tapering of the US Federal Reserve's bond-buying program, declining Chinese manufacturing activity and shaky investor confidence. One of the best ways to stabilise your portfolio is to ensure it maintains a strong foundation and is properly diversified.

With the index down a further 70 points or 1.4% today, investors could use this as an opportunity to stock up on some of Australia's blue chips to solidify their portfolio. Here are three you could consider:

BHP Billiton Limited (ASX: BHP): Unlike many of Australia's other blue chip stocks, BHP heavily underperformed the index in 2013. However, a number of analysts have pegged it to deliver much stronger returns in 2014. The mining giant looks set to return to profitability this year as it continues to focus on reducing operating costs and increasing productivity, while it is also heavily ramping up its production of key commodities such as iron ore. The company is also pegged to increase its shareholder returns which could see a share buyback program implemented as well as an increase in dividend distributions. Since the beginning of the year, shares have fallen 5.7% to their current price of $35.81.

Coca-Cola Amatil Ltd (ASX: CCL): The manufacturer and distributor of some of the world's most popular brands also had a year to forget in 2013 as pricing pressures mounted from rival Schweppes and grocery giants Woolworths Limited (ASX: WOW) and Wesfarmers Limited (ASX: WES). However, the company has enormous growth prospects in Indonesia, while it has also re-entered the $1 billion a year beer market, which should drive earnings for years to come. After finishing last year trading at $12.03 per share, it has fallen a further 4.2% to $11.52.

Telstra Corporation Ltd (ASX: TLS): The telecommunications giant has had a fantastic run over the last three years and, despite its status as one of Australia's largest corporations, still has plenty of growth ahead of it. More and more customers are switching from the services of rivals to Telstra, and the company should continue to benefit from an increased usage of the internet and smartphones. Shares are trading at $5.10 which is 2.8% below where it traded at year's end.

Foolish takeaway

After a stellar 2013, investors are being reminded of the risks involved with investing in the share market. While the blue chips might not have as great growth prospects as many other listed companies, they certainly help to stabilise your portfolio when things get rough.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »