The two S&P/ASX 200 Index (ASX: XJO) blue chip shares in this article could be two of the best to think about.
Blue chips are the businesses that are among the biggest in the country in their respective industries. ASX 200 shares may be stronger in difficult times than their smaller counterparts.
After recent declines, these two businesses could be worth looking at:
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Coles Group Ltd (ASX: COL)
Coles is one of the largest supermarket businesses in the country. We all need to eat, so it's able to provide a pretty reliable set of earnings and dividends for investors.
The Coles share price is actually down by 14% since 8 January 2021, which largely happened because of the result release in reporting season. In the first half of FY21, it reported that sales rose 8.1% to $20.4 billion and earnings per share (EPS) went up 14.5% to 42 cents.
The supermarket business has seen elevated sales because of COVID-19 demand. Online sales in-particular had been strong with 61% growth over the six months.
However, the trouble for the ASX 200 blue chip share is that it's now cycling against very strong sales in 2020 when COVID caused a lot of pantry stocking. In an trading update, it said that in the first six weeks of the third quarter, sales growth was just 3.3% and online sales growth was 37%. At the time, the business warned that sales and earnings before interest and tax (EBIT) could come under pressure.
The third quarter update proved this to be so. Third quarter Coles sales were down 5.1%, although over a 2-year period sales were up 7.2%.
However, growth is returning. In the first four weeks of the fourth quarter, sales were up 4%. It continues to invest for growth.
The Coles share price is valued at 21x FY21's estimated earnings with an estimated grossed-up dividend yield of 5.5% according to Commsec.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is one of the largest fund managers in Australia. It's currently rated as a buy by Morgans with price target of $58.26.
The Magellan share price is down 16% over the last six months. Its funds haven't been performing strongly over the last six months as a result of difficulties for its tech share investments as well as the stronger Australian dollar.
However, Magellan's funds under management (FUM) continues to go. This adds to the ASX 200 blue chip share's management fees and profitability. At the end of March 2021 it had FUM of $106 billion. It continues to receive net inflows, with $206 million during March.
Morgans believes that Magellan's long-term growth will be driven by new offerings as well as its new investments such as Barrenjoey. Magellan is currently working on a retirement product for retirees.
At the current Magellan share price, it's valued at 19x FY22's estimated earnings according to Morgans. It also has a projected FY22 partially franked dividend yield of 4.75%.
