If you're wanting to construct a balanced portfolio, having a few blue chip ASX shares in there could be a good idea.
Blue chip companies tend to be well-known, long-established, and in strong financial positions.
They're companies that are likely to be around for a long time, allowing investors to make long term investments that benefit from the power of compounding.
But which ASX blue chip shares should you buy? Two to consider are listed below:
REA Group Limited (ASX: REA)
The first blue chip ASX share to look at is REA Group. It is the clear leader in real estate listings in the Australian market. At the end of the first half, the company reported 115 million monthly visits to its platform. This is 3.2 times more visits than its nearest competitor.
In addition to this, REA Group revealed that trading conditions are improving and listing volumes are growing again. Combined with price increases, cost reductions, and new revenue streams, this appears to have positioned the company for growth over the coming years.
One broker that expects this to be the case is Morgan Stanley. It is very positive on the company's future and recently put an overweight rating and $175.00 price target on its shares. This compares to the current REA Group share price of $135.97.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is arguably one of Australia's highest quality companies. The conglomerate owns and operates a diverse group of businesses across several sectors. This includes Bunnings, Catch, Covalent Lithium, Kmart, Officeworks, and Target.
And given Wesfarmers' strong financial position and penchant for making earnings accretive acquisitions, it seems quite likely that it will be adding to its portfolio in the near future.
In fact, analysts at Goldman Sachs believe the company has an excessive capital position, with over $8 billion in excess of credit requirements, prior to the Mt Holland development. This gives it a lot of firepower when considering its next move.
It is partly because of this that the broker currently has a buy rating and $59.70 price target on its shares. This compares to the latest Wesfarmers share price of $50.59.
