Well, we’re only a few days away from December and the end of the year is nigh upon us. Whilst it’s been a very good year on the stock market (so far, touch wood), it’s probably a good time to start thinking about what our portfolios might look like heading into both a new year and a new decade.
Blue-chip shares are named after the highest value chip in poker, so when I’m thinking about what shares to put on my 2020 watch list, I want to make sure my picks live up to this reputation. So, here are 2 ASX blue-chips that I would want in my portfolio in 2020 and beyond.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is perhaps the only full-scale conglomerate we have in the ASX 50. This company is really a collection of smaller companies – if you can call Bunnings Warehouse, Officeworks, Kmart and Target small. In addition to these household names, Wesfarmers also owns Kleenheat Gas, Workwear Group and stakes in Coles Group Ltd (ASX: COL) and BWP Trust (ASX: BWP), amongst others. Long story short, you are getting a massive portfolio of diversified businesses within one WES share.
I also like the approach Wesfarmers has with managing its capital. In my opinion, last year’s spin-off of Coles has benefitted shareholders enormously, and shows management’s interests align with shareholders. For these reasons, I think this company is a top blue-chip to buy for 2020 and beyond.
Woolworths Group Ltd (ASX: WOW)
Woolworths shares have had a phenomenal 2019 so far, rising from $29.15 at the start of the year to today’s share price of $39.18 – a YTD gain of nearly 35% not including dividend payments.
I think its defensive nature as well as Woolworths’ ability to hold its market share in the face of fierce competition from Coles and Aldi proves that WOW shares are a great stock to own an interest in.
However, I personally will be waiting for a lower entry price before opening a position. Woolies remains a company I would love to own in 2020, but I think its current price-to-earnings ratio is a little high for a blue-chip at 34.5.
These 2 ASX companies are (in my opinion) amongst the bluest of the ASX blue-chips and are businesses I think would do well in any portfolio. Thus, I think Woolies and Wesfarmers would be great stock to buy for 2020 and beyond and I’ll be watching WOW and WES shares for an attractive entry price going into December.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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.