Blue chip shares are perennially popular. Now more than ever, investors are seeking quality as a shield to the economic impacts of COVID-19.
Blue chip companies are strong names in their industries and have a good financial track record. The ASX is home to a diverse range of blue chip shares across a variety of industries. But some sectors are more resistant to the COVID-19 pandemic than others. Let’s take a look at 4 coronavirus-resistant blue chip ASX shares.
Coles Group Ltd (ASX: COL)
Coles lays claim to some 26.6% of Australia’s grocery market, just behind rival Woolworths Group Limited (ASX: WOW), which has 32.9% market share. Operating in the grocery market means Coles is running a defensive business – demand will be fairly consistent regardless of the economic climate. After all, everyone needs to eat.
Panic buying in March lifted supermarket sales for the third quarter, with similar consumer behaviours emerging recently in Melbourne ahead of heightened lockdowns.
AGL Energy Limited (ASX: AGL)
AGl operates Australia’s largest energy generation portfolio. It generates and sells energy from power stations using thermal and wind power, natural and coal seam gas, hydroelectricity, wind, and solar energy.
Society’s need for electricity is non-negotiable. While demand may ebb and flow with industry activity, a certain level of underlying demand is virtually guaranteed. AGL has predicted full year profits in the upper half of its guidance range of $780–$860 million.
Woolworths Group Ltd (ASX: WOW)
With nearly 33% of the Australian grocery market, Woolworths has seen consistant demand throughout the pandemic. Like Coles, Woolworths sells things people need – food, household, and hygiene products. Demand for these products has been strong with Woolworths reporting a 10.7% increase in third quarter sales thanks to the same panic buying that impacted Coles. The company has been forced to close 22 Big W stores in Melbourne due to stage 4 lockdowns in Melbourne, however supermarkets will remain open.
Origin Energy Ltd (ASX: ORG)
Origin Energy is one of Australia’s largest energy retailers with approximately 4.2 million customers. It services both industry and business users and the residential market.
Like AGL, Origin Energy benefits from the modern economy’s reliance on electricity. During the first round of lockdowns Origin saw business demand decrease while residential demand increased.
Origin also has a 47.5% interest in the Australia Pacific LNG Joint Venture, Australia’s largest producer of coal seam gas. The company received record distributions of $1,275 million from the joint venture in FY20.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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.
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