If I were buying ASX blue chips today I’d want to buy ones that have long-term growth potential.
Shares have the potential to create really nice returns over the years if you invest in the right shares.
Some ASX blue chips may actually face poor returns over the coming years. For example, I’m not confident about the growth potential of banks such as Australia and New Zealand Banking Group (ASX: ANZ). From this share price I’m not sure that BHP Group Ltd (ASX: BHP) would be a good choice either.
But there are some blue chips I wouldn’t mind buying today within the ASX 50:
APA Group (ASX: APA)
APA is one of the biggest infrastructure businesses on the ASX, it’s my preferred pick for both infrastructure and energy exposure.
It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.
It’s one of the few businesses within the ASX 50 that should be relatively unaffected by the coronavirus impacts during this period. Reliability is valuable over the next 12 months. I think it’s a really good ASX blue chip.
Over the longer-term the business continues to look for investment opportunities both here and also in the US.
Macquarie Group Ltd (ASX: MQG)
Macquarie is one of my favourite financial businesses on the ASX. The global investment bank is one of the biggest asset managers in the world, which generates attractive fees. This division will be important during the coronavirus.
One of the main reasons why I’m attracted to Macquarie is its quality and price. Over the past decade it has grown wonderfully and invested into a number of different attractive areas. It has high quality management and having the ability to grow anywhere in the world is a great feature. Over the long-term I think it will be one of the best ASX 20 blue chips.
The Macquarie share price is currently down 31% from 21 February 2020. But don’t forget that interest rates are now incredibly low and there’s a lot of global central bank support.
Amcor Plc (ASX: AMC)
Amcor is one of the few businesses to upgrade its profit guidance for FY20. It’s now expecting adjusted earnings per share (EPS) growth in constant currency terms of 11% to 12%.
The global packaging business’ merger with Bemis is going well with year to date benefits of $55 million.
In the nine months to 31 March 2020 Amcor generated ‘generated’ free cash flow of $367 million, which was up by $217 million. Amcor is repurchasing shares and its dividend remains solid. It’s a great ASX blue chip for this situation.
Each of these ASX blue chips have promising long-term futures. At the current prices I think Amcor would probably be the best pick, but I really like APA for its defensive distribution.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited and Macquarie Group Limited. The Motley Fool Australia owns shares of APA 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.
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