Motley Fool Australia

3 ASX200 blue chips I’d buy for my portfolio

Where to invest

It’s quite hard to find good value growing shares in the ASX200 (ASX: XJO) at the moment, but particularly hard to find growing businesses with not-bad dividends.

Many of the best ASX200 shares are also trading at very high valuations, so they’re probably not the best options.

However, the below ASX200 shares could be good ideas:

Brickworks Limited (ASX: BKW) 

Brickworks has three (or four) high-quality divisions which all have long-term attractive growth potential.

It owns a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG). Industrial properties are highly sought after in city locations for businesses wishing to improve their logistics.

Brickworks also owns a sizeable amount of shares of quality investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which has been an excellent long-term investment.

The final segment is the building division. It’s a very large brickmaker in Australia with a few other products and it is now expanding in the US with acquisitions, which is a huge potential market in coming years.  

Webjet Limited (ASX: WEB)

The travel business has taken a bit of a tumble since reporting its FY19 result which included good organic growth, acquired growth and predictions of higher profit margins to come.

Many of the best ASX shares are ones with highly scalable economic models where new revenue adds to profit at a faster rate. Webjet is somewhat the same, except its revenue may be volatile sometimes – demand for travel can be variable.

But I really like the prospects of WebBeds, the business to business (B2B) segment, where it is now a large global player and growing at a good rate. There are plenty of opportunities to expand for many years into the future organically and perhaps further acquisitions in the future.

InvoCare Limited (ASX: IVC) 

The largest funeral operator in Australia and New Zealand doesn’t sound like an exciting opportunity. But, sadly, the ageing demographics are a strong tailwind for InvoCare.

Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. Combine that with growth in the average price per funeral over time and it should lead to solid growth of earnings and dividends over time.

Foolish takeaway

Each of these businesses could grow at a solid rate over the coming years, even if there’s some short-term hiccups along the way. At the current prices I’d be very happy to buy shares of Webjet and Brickworks.

If you back out the Soul Patts shares value in Brickworks, the rest of the earnings and assets look cheap. Webjet is trading at a low price compared to its projected earnings in a couple of years.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks, InvoCare Limited, and Webjet Ltd. 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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