The Australian share market is filled with a number of well-known and popular blue chip shares.
But it is important to remember that just because a share has blue chip status, it doesn’t necessarily mean it will be a good investment.
With that in mind, are these blue chip shares in the buy zone?
Coca-Cola Amatil Ltd (ASX: CCL)
In the first half of FY 2018 this beverage giant posted a 5.9% decline in underlying net profit after tax. The company’s Australian Beverage’s segment acted as a major drag on its performance, posting a decline in EBIT of 3.6% to $176.3 million. This segment, which is its biggest contributor to earnings by some distance, appears to be struggling for growth due to changing consumer habits. While the company does have plans in place aiming to turn things around and its shares are changing hands on reasonably low multiples, I’d suggest investors wait for a return to growth before investing.
CSL Limited (ASX: CSL)
I think that this global biotech star is one of the best blue chip shares on the local market. And thanks to a recent pullback in its share price, now could be an opportune time to pick up shares with a long-term view. After all, with a growing plasma collection network, a strong core business, a lucrative pipeline of products, and a fast-growing influenza business, I think CSL is capable of growing its earnings at a solid rate for many years to come.
Woolworths Group Ltd (ASX: WOW)
Last month this conglomerate released its full year results and revealed a net profit after tax of $1,676 million, up 13.1% year on year. While I felt this result was strong, unfortunately its trading update for the first few weeks of FY 2019 was surprisingly weak. A slowdown in comparable sales growth from its Australian Food business and the success of rival Coles’ latest marketing campaign look likely to result in a much softer performance in FY 2019. So with its shares changing hands at 22x earnings at present, I think it would be best to wait for an entry point at a lower level.
For many, blue chip stocks mean 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 2018."
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%.
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.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Coca-Cola Amatil 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.