2 top ASX 200 blue chip shares worth a spot in your portfolio

I think these 2 top S&P/ASX 200 (ASX:XJO) shares are worth a spot in your portfolio including EML Payments Ltd (ASX:EML).
The post 2 top ASX 200 blue chip shares worth a spot in your portfolio appeared first on Motley Fool Australia. –

asx 200, share price increase

I think that some of the best ASX shares are within the S&P/ASX 200 Index (ASX: XJO), and they’re worth a spot in your portfolio.

ASX 200 blue chip shares are strong enough to be able to get through difficult periods like COVID-19. But many of the shares outside of the ASX 20 still have very good growth potential.

Here are two of the most promising ideas at the current prices in my opinion:

EML Payments Ltd (ASX: EML)

EML Payments provides payments in different ways. The ASX 200 share be used by clients for rewards, gifts, incentives and to disburse payouts. It has attractive diversification in how to reach the customer.

Before COVID-19 came along, physical gift cards were a big part of the company’s growth prospects. Obviously social distancing, store closures, consumer cautiousness and a rise of online spending has seen the demand for physical gift cards decline.

So I think this company could be a good way to invest on a shift back to normal life if COVID-19 can be eliminated in Australia or an effective vaccine is produced.

Total revenue increased by 25% to $121.6 million and group earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 10% to $32.5 million.

But even if retail shopping doesn’t quite return, I still think EML Payments is a solid ASX 200 share option. The EML Payments share price is down 23% since 10 June 2020 – to me it’s a much better price. That’s despite management saying June and July trading was encouraging.

Also, the business offers things like online gift cards – this could see a significant boost coming up to Christmas, particularly in the northern hemisphere.

A2 Milk Company Ltd (ASX: A2M)

In my opinion, A2 Milk is one of the highest-quality ASX 200 shares. Selloff opportunities are a great time to buy shares of great businesses. Investing should be about multiple year timeframes, not just a single half-year or even 12-month period.

Long-term investors are being presented with an A2 Milk share price which is down 16.5% since 25 September 2020 and down 28% since 30 July 2020.

I understand why investors decided to sell. The local daigou sales channel is being heavily disrupted by COVID-19 impacts with the heavy lockdown in Victoria and the broader limit on international students and tourists caused by Australia’s border closures.

But A2 Milk can make up for this short-term disruption by continuing to build its China-based business and sell more products locally. The ASX 200 share is seeing success from its heavy investment in marketing in China. It’s gaining market share in the important mother and baby store market across China, with distribution increasing to more stores each month.

Things are also going well in the US. In its most recent trading update, the company said that its performance of the liquid milk business in America was strong. In FY20 it saw USA milk revenue growth of 91.2% with distribution expanded to 20,300 stores.

A2 Milk continues to target an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of at least 30% for the longer-term which is an attractive mix of profitability and investing for growth.

Don’t forget, the company is actually still guiding for growth in FY21.  It’s expecting revenue to be between NZ$1.8 billion to NZ$1.9 billion. That would represent growth of between 4% to 10%, up from NZ$1.73 billion in FY20.

But it’s the growth beyond FY21 that makes me think it’s a long-term buy today, particularly with the North American growth. The A2 Milk share price is currently trading at 22x FY23’s estimated earnings.

These Dividend Stocks Could Be Your Next Cash Kings (FREE REPORT)

Motley Fool Australia’s Dividend experts recently released a brand-new FREE report revealing 3 dividend stocks with JUICY franked dividends that could keep paying you meaty dividends for years to come.

Our team of investors think these 3 dividend stocks should be a ‘must consider’ for any savvy dividend investor. But more importantly, could potentially make Australian investors a heap of passive income.

Don’t miss out! Simply click the link below to grab your free copy and discover these 3 high conviction stocks now.

Click Here For Your Free Stock Report

Returns As of 6th October 2020

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 top ASX 200 blue chip shares worth a spot in your portfolio appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!