With the Australian Financial Review (AFR) leading with the headline Markets 'set for a correction' investors could rightly be feeling a little nervous right now.
Before you go out and sell your portfolio and move back to cash however there are a couple of points worth remembering. Firstly, despite Friday's deep falls the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is only down 0.6% in the last five trading sessions. Secondly and more importantly, in the long term the market rises.
Economic growth is perhaps the greatest tailwind of all for investors.
When it comes to investing for the long-term, the key for investors is to make sure that their portfolio will rise to – that may seem like a pretty simplistic statement to make but in reality it is a task which evades far too many investors.
One way which is arguably a relatively safe way to grow your wealth is to own high quality, blue-chip stocks that should provide a return at least in line with the market over the long term.
The one big proviso is that many blue-chip stocks look very fully valued and arguably some may be overvalued at present, this increases the downside risk so careful selection of blue-chip stocks is perhaps more important than ever.
Here are three blue-chip stocks which I think look appealing at current prices.
Brambles Limited (ASX: BXB) has demerged its document storage business leaving the firm as a pure play supply chain logistics company. The firm has operations in over 50 countries and is forecast to grow earnings in the double digits. With a FY 2015 price-to-earnings (PE) ratio of 20x, the stock isn't absolutely cheap but it does look appealing on a relative basis.
ResMed Inc. (CHESS) (ASX: RMD) has lost some sales momentum in the last year and this has led to some investors losing faith. Like Brambles, the medical device firm is set to grow earnings at a double digit rate. Trading on a FY 2015 PE of 17.8x, the current price looks like an attractive entry point.
Sonic Healthcare Limited (ASX: SHL) offers a defensive stream of earnings to shareholders which is a key attribute of any blue-chip stock. With health service operations in multiple countries, Sonic should grow earnings at close to 10% in FY 2015. If it meets Morningstar's consensus forecast then the stock is trading on a PE of 16.8x.
