Are these ASX blue chip shares at bargain prices?

Despite giving back some of its gains over the past couple of trading sessions, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has managed to climb more than 3.6% since the start of April.

Sure, the main index is still in negative territory since the start of the year and down by around 12.6% from this time last year but I’m sure there would be some investors feeling more confident that now could be a good time to put some new money to work.

The first place most investors look to invest is in the big end of town – the ‘blue chips’

Unfortunately, this strategy (which has historically been rewarding for investors) has proven to be disappointing over the past 12-24 months with many of the top 20 companies on the ASX struggling to meet market expectations.

While I am not bullish on many of the blue chip stocks, I believe there are a number of stocks that could still offer reasonable returns for investors – especially if the RBA cuts interest rates again, including:

Telstra Corporation Ltd (ASX: TLS)

Investors who are looking for a growth company should probably avoid Telstra. The giant telco has seemingly run out of growth levers and is likely to deliver low-single digit earnings growth for at least the next year. With that said, Telstra does generate a huge amount of free cash flow that can be redistributed to shareholders via dividends. There is also speculation that Telstra may pay a special dividend or commence a share buy-back with the proceeds from the sale of its stake in Autohome. Telstra could, therefore, be an ideal investment for those investors looking for a fairly attractive dividend yield. At the current share price investors can expect to receive a dividend yield of around 5.8% or 8.3% grossed up.

Macquarie Group Ltd (ASX: MQG)

Macquarie is leveraged to the global equity markets so this makes it one of the more risky blue chips on the ASX. This is reflected in the stock’s beta of 2 which means its share price will move twice as much as the overall market at any given time – both in the positive and negative direction. At the current share price around $65, however, I think there is a good risk-reward equation for investors who are risk tolerant and comfortable with volatile share price movements. Earlier this month, the company confirmed it was on track to post earnings growth this year even though trading conditions in some of its key markets have been challenging. Macquarie has worked hard on diversifying its operations and strengthening its balance sheet and I think this strategy will provide a strong platform for growth over the coming years.

Westfield Corp Ltd (ASX: WFD)

Since Westfield reports its earnings and dividend in US dollars, the recent surge in the Australian dollar hasn’t really helped the share price. This could change however, if the RBA does indeed decide to cut interest rates in the next few months, as this should see the Australian dollar head back down towards 70 US cents. Even if this doesn’t occur, I still think Westfield offers investors an attractive investment opportunity as it has one of the best shopping centre portfolios in the world and a huge pipeline of new developments currently under construction. Income-hungry investors will also appreciate a dividend yield at around 3.4%.

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Motley Fool contributor Christopher Georges owns shares of Macquarie Group. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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