If you want to benefit from the long-term wealth-building growth of the share market then I think there’s nothing wrong with going for a ‘blue chip’ business.
There are plenty of other ASX businesses that have been industry-leaders for more than a decade and have market capitalisations above $2.5 billion whilst paying a solid dividend.
Here are three ASX200 blue chips to consider buying:
REA Group Limited (ASX: REA)
REA Group is the leading Australian property portal business with its realestate.com.au website. As long as the Australian population keeps growing and property keeps changing hands then REA Group will be a good way to get a slice of the property market.
The number of property listings has fallen in recent months, but REA Group’s earnings keep going up because of solid price increases and earnings diversification. Being number one creates excellent network effects for REA Group – more sellers attracts more potential buyers, which attracts the most sellers and so on.
REA Group is currently trading at 25x FY20’s estimated earnings.
Crown Resorts Ltd (ASX: CWN)
Crown is the largest casino and entertainment complex operator. A casino licence is a very good form of an economic moat because no other competitors can set up in the city that you operate in. That’s why Crown Melbourne and Crown Perth are such good assets for Crown Resorts.
The upcoming completion of Crown Sydney could turn into a major uplift if earnings because of the stature and location of the complex in the heart of Sydney. One of Australia’s most glamorous businesses will be well-situated in Australia’s glamour city.
Crown is trading at under 20x FY20’s estimated earnings.
Brickworks Limited (ASX: BKW)
Brickworks might be Australia’s most compelling building products company. Although the shorter-term outlook for the Australian operations doesn’t look so good, its recent acquisition of one of the largest brickmakers in the US could be a very compelling long-term buy.
However, I am particularly attracted to the fact that Brickworks has a very large holding of investment house business Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which help Brickworks smooth out its earnings.
I also like that a decent portion of Brickworks’ value and earnings come from its property trust joint venture which is focusing on industrial properties, which are growing in usefulness with eCommerce and automation.
Brickworks is currently trading at 16x FY20’s estimated earnings.
Each of these businesses are very compelling ideas with good growth potential. For long-term returns I think REA Group has the best chance of beating the market, but Brickworks looks like a good idea right now due a large discount to the underlying inferred value of its assets and the very-reliable dividend.
Other non-bank blue chips to consider for a rock-solid portfolio are these long-term ASX shares.
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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks and REA Group 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.