I like investing in S&P/ASX 200 Index (ASX: XJO) blue-chip shares when they're trading at good value. Good prices don't usually stick around forever, so it is worth being opportunistic and jumping on them when the stock looks compelling.
Good blue chips are usually among the best in their industry in the country. Being the biggest and best at what they do means they typically have pricing power, strong profit margins, and a strong market position.
I'm bullish about the below three ASX 200 blue-chip shares, so I'm calling them buys today.
Telstra Group Ltd (ASX: TLS)
Telstra is the leading telecommunications business in Australia, with the largest subscriber base and the biggest mobile network.
In the FY24 first-half result, the business added 625,000 mobile services in operation (SIO) over the 12 months to 31 December 2023, representing an increase of 4.6%. This pleasing increase showed that the ASX telco share can continue to lead the market.
Winning more subscribers and strengthening its market position gives it additional financial firepower to invest more than rivals in the telco infrastructure, entrenching its position as the leader.
Adding more subscribers also helps grow its profit margins because the fixed costs of the business are being shared across more users. For example, in the HY24 result, mobile income rose 4% to $5.3 billion and mobile earnings before interest, tax, depreciation and amortisation (EBITDA) increased 13% to $2.5 billion.
As a bonus, Telstra currently offers a grossed-up dividend yield of more than 7%. I think the ASX 200 blue-chip share looks cheap after falling around 20% in the past year, as seen on the chart below.
Woolworths Group Ltd (ASX: WOW)
Woolworths is the biggest supermarket business in Australia, with a market capitalisation of more than $38 billion.
I like the moves by the company in recent years to diversify and grow its earnings through acquisitions. For example, it has bought a majority stake of PETstock and it has expanded into business-to-business (B2B) food supply through PFD.
The Woolworths share price has sunk 16% in 2024 to date, as shown on the chart below. It's coming under pressure amid scrutiny about its choices relating to inflation and whether it was price gouging.
The ASX 200 blue-chip share reported its FY24 third-quarter update in early May. The average price change in the Australian food division, excluding tobacco and fruit and vegetables, was just 0.1%. This shows that food inflation has significantly eased. Pleasingly, Woolworths Group's total third-quarter sales increased 2.8%, showing that the business is still growing.
I think the company is a buy at this level, with longer-term tailwinds including population growth and e-commerce growth. In the FY24 third quarter, Woolworths reported its e-commerce sales grew by 18.4% to $1.5 billion.
Brickworks Limited (ASX: BKW)
Brickworks is the biggest brickmaker in Australia and the northeast of the US. The company also has several other building product businesses in Australia, including Bristle Roofing, Austral Masonry, UrbanStone, Terracade, Southern Cross Cement, and Capital Battens.
The FY24 half-year result saw higher margins in its Australian building products division through price increases and productivity improvements. It said it has recently implemented additional initiatives that are expected to deliver $15 million of annualised savings.
Brickworks is undertaking a series of plant closures during the second half of FY24 to carry out maintenance and control inventory, which I think is a wise move. Management said the company is "well-placed to meet [an] expected longer-term uplift in demand" and that Australia "appears to be on the cusp of a significant building boom".
The ASX 200 blue-chip share also believes structural factors such as e-commerce and the digital economy will continue to drive demand for its prime industrial facilities "for many years to come". Brickworks owns half of an industrial property trust along with Goodman Group (ASX: GMG) where large warehouses are being built.
The Brickworks share price has fallen 15% since 8 March 2024, making this an excellent time to look at the ASX 200 blue-chip share, in my opinion.
