Are these beaten up blue-chips in the bargain bin?

Credit: Mike Mozart

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has performed well this year and is just a fraction away from breaking through the 6,000 points mark.

Unfortunately not all shares on the index have performed so well. In fact, the three blue-chips listed below have had a terrible time of late. Does this make them bargain buys?

The Coca-Cola Amatil Ltd (ASX: CCL) share price tumbled 13% in April after the beverage company downgraded its full-year guidance on the back of difficult trading conditions in its Australian beverages division. Although one broker thinks this is just a temporary headwind and expects things to improve, at around 18x underlying earnings I see little value in owning its shares today. I would suggest investors wait for its shares to fall to a level befitting the company’s current growth profile.

The Fortescue Metals Group Limited (ASX: FMG) share price has fallen 23% in the last three months after the iron ore price fell back down to Earth. Whilst I think that Fortescue Metals is one of the best options in the resources sector, I still believe that the iron ore price has further to fall. This could drag Fortescue’s share price down along with it. In light of this I feel investors should hold off making an investment at this point.

The Telstra Corporation Ltd (ASX: TLS) share price has dropped 16.5% so far this year. Concerns over the impact the NBN and the new TPG Telecom Ltd (ASX: TPM) mobile network will have on its business are largely behind the decline. While these are valid concerns, I still feel that market has overreacted somewhat. So with its shares providing a trailing fully franked 7.3% dividend, I think Telstra could offer investors a compelling risk/reward.

While Telstra might be worth a closer look, these high-flying blue-chips are strong buys in my opinion. I expect them to smash the market this year.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can 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.

Click here to claim your free report.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Telstra Limited. Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of TPG Telecom Limited. 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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