The 2 ASX blue chip shares in this article could be long-term ideas to reliable returns. One idea is Ansell Limited (ASX:ANN).
The post 2 reliable blue chip ASX share to buy appeared first on The Motley Fool Australia. –
There are some blue chip ASX shares that could be worth owning for potentially reliable and long-term returns.
What’s a blue chip?
Well, it depends on your definition. For some people it might mean the biggest shares on the ASX share market. Others might say that it’s shares within the ASX 50 or the ASX 100. It may mean that it’s the leader in its industry.
Whatever the size of a blue chip, it may mean that investors can hope for a somewhat more reliable return than the overall market, or it’s able withstand any economic downturns better than other businesses across the economy.
Here are two examples of blue chip ASX shares:
Ansell Limited (ASX: ANN)
Ansell is one of the businesses involved in the fight against COVID-19. It provides health and safety protection products such as gloves.
The world has been seeing an increase in the number of COVID-19 cases worldwide, and there has been a greater focus on protection against transmission according to Ansell.
The ASX blue chip share continues to see elevated demand for its examination gloves, life sciences and chemical protective clothing. Ansell is also seeing strong market share gains in its mechanical and surgical segments.
Ansell recently said in a trading update it has been implementing efficiencies to increase output and investing in production capacity at its own plants. Management boasted that the company has been able to successfully and safely meet higher demand where others in the industry have struggled.
In addition to sizeable volume increases, the company has been able to effectively pass through price increases to offset higher costs from raw material, particularly in exam and labour costs.
In the first half of FY21, the company is expecting to deliver organic revenue growth of more than 20% and unaudited earnings per share (EPS) growth of 62% to 68% in a range of 81 cents to 84 cents. That means it’s now expecting FY21 EPS to be in a range of 135 cents to 145 cents.
Amcor Plc (ASX: AMC)
Amcor is one of the world’s largest packaging businesses for food, beverages, pharmaceutical, medical, home, personal care and other products.
The company is focused on making packaging that uses less materials, is increasingly cyclable and reusable, and is made with more recycled content.
The ASX blue chip share has around 47,000 employees with operations that span 230 locations in more than 40 countries.
Despite all the impacts of COVID-19 on the global economy, Amcor continues to generate profit growth and it keeps increasing the dividend.
In the first quarter of FY21 it saw 9% growth of adjusted earnings before interest and tax (EBIT) to $358 million in constant currency terms and adjusted EPS went up 20% in constant currency terms.
Amcor said that demand for its products remained resilient. Both segments delivered growth with ‘flexibles’ adjusted EBIT going up by 11% and ‘rigid packaging’ adjusted EBIT rising by 7%.
The company said that its flexible packaging businesses are capitalising on the strategic and financial benefits from the Bemis acquisition and cumulative cost synergies have now reached $100 million. Rigid packaging is also building momentum with “strong” volume growth and mix in North America as the business continues its transformation.
Amcor CEO Ron Delia said at the time of the FY21 first quarter update: “The Amcor investment case has never been stronger. In addition to further acquisition synergies and an attractive dividend currently yielding more than 4%, organic growth from our consumer and healthcare exposure should remain resilient and will be enhanced over time from innovations delivering more sustainable packaging. With a strong balance sheet and annual free cash flow of over $1 billion, we also have substantial capacity to reinvest in the business and pursue acquisitions.”
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
- Why the Amcor (ASX:AMC) share price is having a rough start to 2021
- ASX 200 up 0.5%: BHP’s update, PolyNovo jumps, Ansell impresses
- Why Afterpay, Ansell, MyDeal, & PolyNovo shares are storming higher today
- Why the Ansell (ASX:ANN) share price stormed 5% higher today
- Is the “Blue Wave” of US Democrats good or bad for ASX investors?
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited. The Motley Fool Australia has recommended Ansell Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.