In the coming years, Australia's economy will continue to transition away from the mining and resources sectors towards those industries with more sustainable growth trajectories.
While the success of a 'top-down' stock-picking strategy (i.e picking stocks based on industry tailwinds) is questionable, investing in companies with good economics and natural tailwinds can produce exceptional returns over time.
Technology companies provide a way forward, so too does tourism and, to a lesser extent, agriculture. Another two sectors of our economy that I believe could be set for long-term growth are healthcare and biotechnology. Australia has a robust healthcare system, which is aided by a strong regulatory environment and a robust educational system.
Further, innovative biotechnology companies are usually rewarded for their time and capital with patents and have proven their ability to transverse international borders.
The next three blue chip shares provide a viable avenue for savvy long-term investors to exploit the healthcare and biotechnology tailwinds. Indeed, even at today's prices, I urge you to consider adding them to your watchlist — at the very least.
- The CSL Limited (ASX: CSL) share price recently popped back above $100. CSL is a world-leader in the research, development and marketing for blood plasma products. Its products are used to prevent and treat complex disorders affecting many people throughout the world.
- ResMed Inc. (CHESS) (ASX: RMD) is also a leader in its industry. It produces devices for the treatment of sleep apnoea and related respiratory disorders. Its continuous positive airway pressure (CPAP) and automatic positive airway pressure (APAP) machines aren't cheap, but have proven to be among the most effective in the industry.
- Like ResMed and CSL, Cochlear Limited (ASX: COH) is a name familiar to many Australians. The Cochlear range of hearing devices are also very popular throughout the world, and the company operates in more than 20 countries. Despite a recent rebound in share price, however, Cochlear appears a worthwhile investment over the long term.
Buy, Hold or Sell?
I think CSL, ResMed and Cochlear are among the ASX's best blue chip stocks, and their performance over the next 10 years will speak for itself. While they may appear expensive using conventional valuation metrics like a price-earnings ratio (P/E), I'm willing to pay up for the right to hold quality businesses like these for the long term.
