ASX blue-chip shares can be very attractive businesses to look at for opportunities, thanks to their scale advantages and other positive characteristics.
When large companies are able to earn stronger profit margins than the smaller competitors, they're more compelling investments and can grow profit more from each additional dollar of revenue.
The fund manager Wilson Asset Management has outlined two appealing, large businesses in the WAM Leaders Ltd (ASX: WLE) portfolio. This listed investment company (LIC) is focused on the ASX large-cap shares. Let's take a look at why they're opportunities.
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CSL Ltd (ASX: CSL)
WAM describes CSL as a global biotechnology company that's developing plasma therapies, vaccines and rare disease treatments.
The fund manager pointed out that in July, the company was a "standout" beneficiary of investment flows into the healthcare sector, driven by the ongoing unwinding of ASX bank share positioning.
WAM said previous setbacks marked an inflection point for the company, and this has led to the company taking a "more disciplined approach to capital allocation" which the fund manager expects to unlock a meaningful cost reduction opportunity in the near-term.
The investment team did point out that tariff implications "remain opaque", but the market's tolerance is increasing as "uncertainty is priced in" with the ASX blue-chip share.
CSL benefits from industry dynamics that are largely uncorrelated to the economic cycle and has demonstrated resilience through consistent delivery, according to WAM.
WAM concluded its thoughts on the ASX biotech share giant with the following:
Considering its historic multiples, long-term growth profile, and earnings growth exceeding 10% per annum, the company is attractively valued and well positioned to benefit from renewed investor interest and performance ahead.
WiseTech Global Ltd (ASX: WTC)
The other ASX blue-chip share that WAM highlighted is WiseTech, a provider of software solutions to the global logistics services industry.
WAM noted that last month the business announced the appointment of a permanent CEO, easing concerns about leadership uncertainty and governance, according to the fund manager.
The investment team noted that strong results from US technology companies bolstered the ASX tech share, while falling US bond yields made growth stock valuations "easier to justify", which helped reduce investor concerns about high stock prices.
One of the reasons why WAM Leaders is attracted to the ASX blue-chip share was its recent completion of the e2open acquisition, earlier than the market had been expecting.
WAM said:
The acquisition significantly expands WiseTech Global's product offerings and customer base, and is expected to increase earnings from year one.
