Which are the best ASX blue chips to own? There are 20 to choose from in the ASX20.
There are the big banks of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ). There’s also investment bank Macquarie Group Ltd (ASX: MQG).
There are several resource businesses including BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). Insurance giants like Insurance Australia Group Ltd (ASX: IAG) and Suncorp Group Ltd (ASX: SUN) are candidates, as are packaging & logistics businesses Amcor Limited (ASX: AMC) and Brambles Limited (ASX: BXB). Transurban Group (ASX: CSL) is also an interesting idea. Telstra Corporation Ltd (ASX: TLS) is another consideration.
Sadly, in my opinion, nearly all of the above businesses face low growth prospects and most of them are cyclical. I don’t like the idea of shares that lend debt or have large debts on their balance sheets.
Of all the ones I’ve mentioned so far, Macquarie would be my favourite for its global earnings base. However, it could also be susceptible to cyclical forces.
I think the best share to own in the ASX20 is CSL. It has defensive earnings because it’s a healthcare business, its primary business is growing organically at high single digits every year and it has an impressive pipeline of new products coming thanks to its commitment to quality research & development.
However, the term ‘blue chip’ doesn’t have to apply to just the biggest businesses. It can also apply to smaller shares that are leaders in their industry such as Challenger Ltd (ASX: CGF), Bapcor Ltd (ASX: BAP) and Altium Limited (ASX: ALU).
The above three shares seem more attractive to me than CSL, they seem better valued for the growth they’re predicting over the next five years.
Motley Fool contributor Tristan Harrison owns shares of Altium, Bapcor, and Challenger Limited. The Motley Fool Australia owns shares of and has recommended Bapcor, Challenger Limited, and Wesfarmers Limited. The Motley Fool Australia owns shares of Altium, COLESGROUP DEF SET, and National Australia Bank Limited. The Motley Fool Australia has recommended Scentre Group. 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.