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Is the ANZ, APA or CSL share price a strong buy?

Is the Australia and New Zealand Banking Group (ASX: ANZ), APA Group (ASX: APA) or CSL Limited (ASX: CSL) share price a strong buy?

The ASX has plenty of quality blue chip shares. However, I prefer to either buy ASX shares that I think will provide better growth than the market or better dividends. If you’re not going for either of those goals then you may as well just invest in BetaShares Australia 200 ETF (ASX: A200) for the ultra-low-cost and ultra-low effort.

We need to be selective with the prices that we pay for individual shares. The way you produce better returns is by buying at the right time. Either earlier on with in share’s growth journey or during a dip.

The COVID-19 selloff was definitely a bad time for many ASX shares, with some falling by over 50%. Some shares have recovered, whereas others haven’t. I’m going to look at whether the following ASX blue chips are strong buys:

CSL 

The CSL share price is still down more than 10% from its pre-coronavirus high in February 2020. That’s despite the company reaffirming its profit guidance for FY20 of between US$2.11 billion to US$2.17 billion.

The healthcare giant is involved in trying to help patients with COVID-19. The company warned that there may be modest delays with its capital projects and clinical trials. But that doesn’t put me off. 

I continue to be impressed by CSL’s commitment to research and development. It’s the creation of new and improved products that will continue to drive earnings higher as CSL helps solve healthcare problems around the world.

The company has been one of the best ASX share performers over the past two decades. I don’t expect the same growth of the CSL share price, but it could still provide good compounding results over the long-term. I wouldn’t call it a strong buy though.

ANZ

The ANZ share price is still down 30% from its pre-COVID-19 price in February 2020. Sadly, ANZ hasn’t performed like the CSL share price has in 2020 or over the longer-term.

The big ASX bank is facing a looming date in a few months where a lot of government support like the jobkeeper package is likely to end, or at least heavily reduced.

COVID-19 is expected to hurt ANZ’s earnings this year. That’s why ANZ included a credit provision of around $1 billion for impacts that ANZ expects to face from the pandemic.

I think it was a wise decision by the board to defer the dividend decision. ANZ’s leadership didn’t know how bad things would be, or that things wouldn’t turn out as badly as feared. 

There is still a lot of uncertainty. COVID-19 is spreading in Victoria and there is a danger that it could return to other states. I don’t think the ANZ share price is an obvious buy right now.  

APA

The current APA share price is almost exactly the same level as the pre-COVID-19 price. Just looking at the speed of the recovery, APA has gotten back faster than the CSL share price.

With its huge gas pipeline network around Australia, APA is well positioned to keep generating reliable cashflow whether COVID-19 spreads across the country again or not.

The infrastructure giant also has other energy assets which provide diversified earnings for shareholders.

APA is actually one of the best dividend shares on the ASX in my opinion. At least in terms of its consistent growth. The distribution has increased every year for a decade and a half. I don’t think APA is a strong buy for total returns today, but I think it’s a strong buy if you want reliable annual income.

The current FY20 distribution yield is 4.4% based on the 50 cents per unit payout.

Foolish takeaway

The CSL share price has produced strong returns in the past. I don’t think it’s a fantastic buy today, but it would be my choice of the three for long-term capital growth. APA is the one that attracts me the most for income.

Where to invest $1,000 right now

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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 June 30th

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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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