3 bargain blue chips

There is no stock investor existent who doesn’t get excited by a dirt cheap blue chip, and these 3 companies should be on your list of possible buy-ins this week if your portfolio is looking lean on the big guys at present.

Telstra Corporation Ltd (ASX: TLS)

Telecommunications giant Telstra Corporation Ltd has long been considered by many as a buy and hold forever type stock.

It is no secret that the Telstra share price has bottomed out considerably in the past 12 months, down from $4.25 at this time last year to $3.08 at the time of writing – a drop of 27.5%.

This puts the stock close to its 2010 lows, but there is plenty of room for capital growth here.

The arrival of 5G internet will see smaller fry such as TPG Telecom Ltd (ASX: TPM) attempt to assert themselves in the space to gain market share, but there is a reason why Telstra has maintained its top spot for so long, and it’s unlikely the big-name telco will go down without one hell of a fight.

And as the race to 5G continues, Telstra has unveiled its interest in drone usage – following Google’s lead by investing in Californian-based drone flight platform “Cape” recently.

With such forward-thinking its fair to say the telco stalwart will likely have plenty of 5G market-share snatching tricks up its sleeve – watch this space.

Telstra will have to clean up its act in terms of customer complaints off the back of threats from Communications Minister Mitch Fifield to impose fines and compensation payments on telcos who do not respond correctly to customer grievances.

But with a generous dividend yield of more than 7% and a proposed FY18 fully-franked dividend of 22c per share, shareholders should still be secure in the knowledge they will reap returns from the stock in the medium term at the very least.

Challenger Ltd (ASX: CGF)

Shares in investment management firm Challenger Ltd have been on a serious slide downwards since late 2017, dropping from a December 20 high of $14.35 to today’s price at the time of writing of $10.88.

Challenger is primed to capitalise on Australia’s ageing population, as demand for its products climbs and its grossed-up dividend yield of 4.55% is also nothing to sneeze at.

Challenger shares took a slide last week after it reported its March quarter results, which saw total assets under management (AUM) grow by 3% to $78.6 million, but this was coupled with a 13% slide in its total life sales, down to $1.1 billion.

Challenger CEO Brian Benari said AUM growth of more than $12 billion in the past year was underpinned by business diversification strategies and the company was on track to achieve normalised profit before tax of between $545 million and $565 million.

One to watch for an in, and you shouldn’t have to wait too long at these prices.

Greencross Limited (ASX: GXL)

Pet care retailer Greencross Limited has over 115 veterinary clinics and 200 stores across Australia and the pet industry is certainly a growing sector.

So why have Greencross shares been tumbling lower this calendar year?

Prices are down from a mid-January high of $6.48 to $5.31 at the time of writing, but there doesn’t seem to be any problems at play with its co-location strategy – tipped to save on costs and boost revenue through cross-selling.

On fundamentals, Greencross looks strong, with FY18 results released in February reporting a 9% jump in revenue to $433.3 million, EBITDA up the same amount to $54.4 million, NPAT also on a 9% rise to $23.2 million and EPS up 7% to 19.7c per share.

The company has seen a huge boost to its online arm over the past year too, with online sales up 92% to $9 million which has gone hand-in-hand with an expansion of instore services to include wash and grooming options.

Perhaps this mid-cap has just slipped under the radar for many investors, regardless, it looks like a no-brainer growth stock to me at bargain basement prices right now.

For more blue chips buying ideas check out these Top 3 ASX Blue Chips To Buy In 2018

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Motley Fool contributor Carin Pickworth owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited, Greencross Limited, Telstra Limited, and 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 Scott Phillips.

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