A scroll through the list of the twenty largest stocks on the ASX highlights to investors just how superb the gains since the turn of the century have been from investing in blue-chip stocks.
Consider for example the capital gains alone (not even including the dividends received) for shareholders in stocks such as Commonwealth Bank, Origin Energy and Woolworths. The share prices of these three stocks have gained 206%, 993% and 595% respectively – that's enormous outperformance compared with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), which has rallied 74% since January 2000.
The gains achieved reinforce the benefit of owning quality stocks with entrenched market positions and predictable growth trajectories. It's also inspiration for identifying up-and-coming businesses that could muscle their way into blue-chip territory over the coming decade.
Here are two stocks which could be on their way to blue-chip status.
- Healthscope Limited (ASX: HSO) operates around 44 private hospitals and provides shareholders with exposure to the growth themes of an aging population and higher per-capita spending on health care. Healthscope's business should provide defensive revenue and earnings and consistent growth – both hallmarks of a blue-chip stock.
- Navitas Limited (ASX: NVT) provides shareholders with exposure to the global education industry. Like the health sector, the education sector is a solid growth industry on both a domestic and a global scale. With a long operating history and a trusted brand, Navitas is well placed to continue partnering with leading educational institutions around the world.
