The best S&P/ASX 200 Index (ASX: XJO) blue-chip shares are capable of producing really strong returns. When we're given the opportunity to invest in high-quality names at lower prices, it can be a great time to invest.
Over time, it's businesses that are growing their earnings at a faster pace that benefit the most from compounding.
Amid recent volatility, there are a few names that look too good to miss, like the two below.
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Pinnacle Investment Management Group Ltd (ASX: PNI)
Investing in Pinnacle can be a bit of a rollercoaster, as its short-term share price movements are correlated with the market. The company invests in a wide range of fund managers, each of whom generates earnings from the funds under management (FUM).
The company takes minority stakes in these fund managers (affiliates). It helps them focus on investing by offering a wide array of administrative services, taking care of the behind-the-scenes tasks.
Some of the fund managers that it's invested in include Hyperion, Plato, Palisade, Resolution Capital, Solaris, Antipodes, Metrics, Spheria, Firetrail, Coolabah Capital, Aikya, Life Cycle and Pacific Asset Management.
The Pinnacle share price has dropped by 34% between August and now, yet the most recent update we've heard from the ASX 200 blue-chip share was positive.
In the first quarter of FY26, the business reported that its total affiliate FUM had reached $197.4 billion, representing a 10% increase from June 2025, with the majority of the growth driven by strong net inflows. Net inflows for the quarter amounted to $13.3 billion.
I believe the ASX blue-chip stock now appear undervalued in terms of their long-term growth potential. According to the forecast on CMC Markets, it's priced at 19x FY27's estimated earnings.
Xero Ltd (ASX: XRO)
Xero is a leading cloud accounting business with a global presence across countries such as the UK, Australia, and New Zealand. It has ambitions to expand into other countries, such as Canada and the US, in particular.
Painfully, the Xero share price is down almost 40% from its June 2025 high, so this is a great time to invest, in my opinion.
The company still has incredibly loyal subscribers, with a churn rate of just 1% each year. Xero has managed to increase subscription fees in Australia, the UK, and New Zealand, which has helped drive several key metrics.
In FY25, the business reported the average revenue per user (ARPU) increased 15% to $49.63, the total lifetime value of subscribers grew by 15% to $19.6 billion, operating revenue rose 20% to $1.19 billion, operating profit (EBITDA) grew 21% to $378 million, net profit after tax (NPAT) climbed 42% to $135 million and free cash flow jumped 54% to $321 million.
With the recent Melio acquisition, the company is clearly aiming to increase its presence in the huge US market where there is strong competition. I don't think it needs to succeed in the US to do well overall, particularly at this lower valuation.
Following the significant valuation reversal, I think the ASX 200 blue-chip share looks like an attractive long-term buy.
