The US equity markets have taken a battering over the last month or so. Investors have grown cautious of the lavish valuations of the nation’s tech or biotech corporations like Facebook Inc (NASDAQ: FB) or Priceline Group Inc (NASDAQ: PCLN) which saw the NASDAQ and Dow Jones both plummet. Although the Australian stock market coped rather well through the sell-off, the period of global volatility has acted as a timely reminder of the importance of holding a number of blue-chip corporations within your portfolio.
Blue-chip corporations help to form a solid foundation for your portfolio and can act as a safeguard against the market’s vicious mood swings. As investors grow cautious of other growth or speculative stocks, they often scramble towards the larger corporations given that they are considered to be more ‘defensive’ in nature.
As is the case with any quality company, the best time to buy these blue-chips is when the market isn’t so optimistic regarding their prospects. That is why Westfield Group (ASX: WDC) would be an excellent buy right now. The company’s shares have retreated from their high of $12.55 to today’s price of just $10.65 based on concerns for the future of the bricks-and-mortar retail industry. However, the group is divesting from non-core assets to instead strengthen its more iconic shopping centres which will help drive its earnings for years to come. Prospects for its Westfield London and World Trade Centre (New York) centres are particularly intriguing. Its 4.9% dividend yield is the icing on the cake.
Telecommunications giant Telstra Corporation Ltd (ASX: TLS) is another stock which you should strongly consider. In addition to its bumper 5.6% dividend yield, the telco’s superior customer service levels continues to attract customers from rivals such as Optus, owned by Singapore Telecommunications Ltd (ASX: SGT) or Vodafone, part-owned by Hutchinson Telecommunications (Aus) Ltd (ASX: HTA). The company has admitted that mobile growth will inevitably slow as competition improves but it will continue to benefit from society’s increasing reliance on broadband services.
Also deserving of a position in your portfolio is global packaging company Amcor Limited (ASX: AMC). While it has delivered strong returns over the last five or so years, it will benefit as the global economic outlook continues to improve and when the Australian dollar inevitably falls against the US greenback.
Each of the companies mentioned above are well-positioned to provide your portfolio with solid returns over the long-run.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.
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