Many of the most popular blue-chip shares on the ASX have performed extremely poorly in the last couple of years. Some have grown their earnings at a much slower-than-normal rate and some have even gone backwards.
Although small-cap shares carry greater risk than their blue-chip peers, I believe if you choose wisely you can go some way to limiting this risk.
Three small-cap stars which are at the top of my watch list right now are as follows:
The Australian Vintage Limited (ASX: AVG) share price is currently hovering just above its 52-week low. The wine company’s share price declined sharply this year after its half-year results were impacted significantly by the Brexit. Although volumes rose, revenue fell 8% to $119.3 million as a result of unfavourable exchange rates. Whilst things are unlikely to get easier for the company in the UK any time soon, I expect sales into Asia and its distribution deal in the United States could help offset this weakness.
The Amaysim Australia Ltd (ASX: AYS) share price has fallen around 11% this year despite a reasonably solid half-year result which revealed a 34% increase in mobile subscribers. But the big news from the earnings release was that the long-awaited launch of its NBN service is just around the corner. I believe its asset-light model will allow Amaysim to undercut the bigger players whilst still remaining profitable. If the company can disrupt the home broadband market like it did the mobile phone market, I feel there could be significant growth ahead.
Despite a big decline last week, the Tassal Group Limited (ASX: TGR) share price is up over 9% this year. The leading salmon producer’s share price took a hit last week after it completed an $80 million placement of shares at a price of $4.55 per share. But I feel confident that management’s plan to invest the funds in a range of working capital and capital investment initiatives will ultimately bring value to shareholders. Due to supply issues, global salmon prices are on the rise. If these high prices are sustained then I expect Tassal will be in a strong position to grow its bottom line at an above-average rate over the next couple of years.
Admittedly, not all blue-chips are slow-growing though. These fast-growing blue chip shares are must buys in my opinion.
For many, blue chip stocks means stability, profitability and regular dividends, often full franked..
But knowing which blue chips to buy, and when, can often be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2017."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
If you’re expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you’ll be sorely disappointed. Not only are their dividends growing at a snail’s pace, their profits are under pressure too due to the increasing competitive environment.
The contrast to these “new breed” blue chips couldn’t be greater… especially the very real prospect of significant share price gains, something that’s looking less likely from the usual blue chip suspects.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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.