Whilst I think hot stocks like Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have the potential to be market beaters again next year, they’re admittedly high-risk investments and unsuitable for many investors.
For those investors I have picked out 10 blue chip shares which I think could outperform in 2020. They are as follows:
Australia and New Zealand Banking Group (ASX: ANZ)
Although the big four banks have charged higher this year, I believe this positive form could continue in 2020 if the housing market rebounds and drives solid mortgage loan growth. ANZ remains my preferred pick due to its valuation, strong capital position, and generous dividend yield.
BHP Group Ltd (ASX: BHP)
If you’re looking for exposure to the resources sector then I would pick BHP due to its diversified, world class operations and favourable commodity prices. I believe this has left it well-placed to deliver another strong profit result in FY 2020 and allow it to return significant funds to shareholders.
Cochlear Limited (ASX: COH)
With populations around the world continuing to age, I believe this leading manufacturer and distributor of cochlear implantable devices is well-placed to continue growing its sales and profits at a solid rate in FY 2020. This could mean another year of gains for its shares.
Coles Group Ltd (ASX: COL)
This supermarket giant is another blue chip that I would want to own in 2020. I’m a big fan of Coles due to its defensive qualities, strong market position, and solid growth prospects. Another positive is the return of rational competition in the supermarket industry.
CSL Limited (ASX: CSL)
My favourite blue chip continues to be this biotherapeutics giant. I remain confident that its CSL Behring and Seqirus businesses are well-positioned to continue their positive form and deliver another strong full year result in FY 2020. Management certainly agrees and advised that it expects net profit after tax growth of 7% to 10% in constant currency next year.
REA Group Limited (ASX: REA)
If the housing market rebounds then REA Group could be a big winner in 2020 as this is likely to lead to a strong uplift in listings volumes. Combined with price increases and its new revenue streams, REA Group looks well-positioned to deliver strong earnings growth in the second half of FY 2020.
ResMed Inc. (ASX: RMD)
With demand for its industry-leading products in the fast-growing sleep treatment market continuing to grow, I expect yet another strong result from ResMed in FY 2020. This could allow its shares to continue their ascent over the next 12 months and beyond.
Telstra Corporation Ltd (ASX: TLS)
I think this telco giant could be worth considering for 2020 due to its attractive valuation and improving outlook. Although we have not seen the end of the NBN pain just yet, it is now on the horizon and a return to growth may not be too far away. Another positive is that I remain confident its current cash flows are sufficient to maintain its dividend and no further cuts will be made.
Transurban Group (ASX: TCL)
A final blue chip to consider for 2020 is Transurban. Due to the quality of its assets and their strong pricing power and growing traffic, I believe this toll road operator is well-placed for further solid growth in FY 2020. Another bonus is that with the outlook for rates looking very bleak, demand for bond proxies like Transurban looks set to increase and support its share price.
Wesfarmers Ltd (ASX: WES)
With the housing market continuing to improve, demand for home improvement and household goods looks set to rise. This could mean this conglomerate's Bunnings, Kmart, and Target businesses perform strongly over the next 12 months and drive solid earnings and dividend growth for Wesfarmers. Overall, I think Wesfarmers is one of the better blue chips to buy in 2020 along with these star stocks.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited, Transurban Group, and Wesfarmers Limited. The Motley Fool Australia has recommended REA Group Limited and ResMed Inc. 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.