Leading S&P/ASX 200 Index (ASX: XJO) blue-chip shares can be excellent buys over the long term, thanks to their market share and scale benefits, which typically enable stronger profit margins than competitors.
ASX 200 shares represent 200 of the biggest businesses on the ASX. These businesses are usually among the leaders in Australia in what they do. Names like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), and Woolworths Group Ltd (ASX: WOW) spring to mind.
But CBA, BHP, and Woolworths are not among the top stocks that I'd buy first. I'd want to focus on businesses that I believe have a solid outlook and consistent long-term earnings growth, which is why I'm bullish on the below ASX 200 blue-chip shares.
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Sigma Healthcare Ltd (ASX: SIG)
This business represents a merger between the original Sigma Healthcare and Chemist Warehouse Group. It has Australia's largest retail network of franchised pharmacies, with over 880 franchised pharmacies across a group of franchise brands, such as Chemist Warehouse, Amcal, and Discount Drug Stores.
The business has retail pharmacies in New Zealand, Ireland, and Dubai.
I think the pharmacy business can grow significantly in the coming years with its core operations and growth avenues.
Its international footprint is expanding – at the end of FY25, there were 61 New Zealand stores, 14 Ireland stores, and two Dubai stores. In FY21, it only had 24 New Zealand stores, two Ireland stores, and zero Dubai stores. New Zealand recently passed $1 billion in network sales. In China, it's focusing on online sales growth.
I think there is scope for a significant network of Chemist Warehouse stores beyond Australia's shores, which is a key reason why I like the ASX 200 blue-chip share.
The overall Chemist Warehouse business has grown at a very pleasing pace over the last decade, with retail network sales growing at a compound annual growth rate (CAGR) of 13% between FY15 and FY25 (reaching $10.27 billion). The number of retail Chemist Warehouse locations has grown at an average of 33 per year over the last five and ten years.
I'm also hopeful that new initiatives like Optometrist Warehouse can become a sizeable contributor to the overall business in the coming years.
It's also looking to expand margins by expanding its own brand product range and improving its supply chain, procurement, and back-office systems and processes.
According to the forecast on Commsec, the Sigma Healthcare share price is valued at 44x FY27's estimated earnings at the time of writing.
Telstra Group Ltd (ASX: TLS)
Telstra is the leading telco in Australia, with the most subscribers (including wholesale), strong spectrum assets, and the widest network coverage.
When I think of other sectors like banking or retail, it's a more competitive space for those ASX 200 blue-chip shares than the telecommunications industry, in my view. This dynamic, with Telstra's leading network position, is enabling the company to increase mobile prices and boost profit margins.
Australia is becoming increasingly technological, playing out to Telstra's advantage, with more devices and subscribers using Telstra's network. Future technological advances like self-driving vehicles could add more demand for Telstra in the coming years.
The improvements in Telstra's mobile network, currently using 5G (with 6G on the horizon), could mean more households sign up to use wireless home internet rather than the NBN. This could mean Telstra capturing the margin that's currently going to the NBN for home broadband customers.
I think Telstra is capable of delivering rising profits and dividends in the coming years, which would be a strong tailwind for total returns.
