3 top ASX blue chip shares to buy

There are some ASX blue chips that could be worth buying for their long term growth potential over time. One idea is Wesfarmers (ASX:WES).
The post 3 top ASX blue chip shares to buy appeared first on The Motley Fool Australia. –

asx blue chip shares represented by pile of blue casino chips in front of bar graph

There are some ASX blue chip shares that could be good to consider at the moment due to the potential growth over time.

Here are those ideas:

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of the biggest businesses on the ASX, it runs retail companies like Bunnings, Catch, Officeworks, Kmart and Target.

COVID-19 was a really disruptive period for the Australian economy last year, but Officeworks and Bunnings were two of the biggest beneficiaries as people looked to do home improvement projects, whilst also setting up their homes for working and learning.

Catch, as an online retailer, was another business that saw elevated levels of growth during FY20.

That growth has continued into FY21 for the blue chip ASX share. Wesfarmers gave a trading update that said that Bunnings total sales grew by 25.2% in the financial year to date to October 2020, whilst Officeworks sales went up 23.4%. Catch’s gross transaction value sales surged 114.4% over the same time, whilst Kmart sales rose 3.7% and Target sales dropped 2.2%.

There were different measures of online sales growth success. Excluding Catch, total online sales went up by 166%. Excluding online sales in metro Melbourne, online sales growth was 98%. Including Catch, total online sales across the group increased to $1.3 billion in the year to date.

Wesfarmers also said that the industrial divisions made a pleasing start to the year.

At the current Wesfarmers share price, it’s valued at 28x FY21’s estimated earnings.

APA Group (ASX: APA)

APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

Despite the national impacts of COVID-19, the blue chip ASX share managed to increase its revenue by 4.8% to $2.13 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 5.1%, operating cashflow rose 8.3% and net profit after tax (NPAT) rose 10.1%.

The total FY20 distribution went up by 6.4% to 50 cents per share. The energy infrastructure giant recently increased its interim distribution by another cent, bringing the current annual distribution to 51 cents per share – the yield is 5.3%.

APA continues to invest in new projects, such as a new pipeline in WA, which increases its asset base and aims to unlock more annual cashflow.

A2 Milk Company Ltd (ASX: A2M)

A2 Milk is one of the largest food-related businesses on the ASX. It has a strong market position with infant nutrition and liquid milk in Australia and New Zealand. The company has its sights on a large international market in both Asia and North America.

The blue chip ASX share has suffered difficulties because of the COVID-19 pandemic. It’s seeing lower sales from the important local daigou channel, though the company continues to grow sales and gain market share in mother and baby stores (MBS) in China. It’s going to try to reactivate the daigou channel in 2021. 

In North America, A2 Milk continues to see good performance with its liquid milk sales and it’s starting to generate revenue from Canada thanks to an agreement with Agrifoods.

The A2 Milk share price has fallen by 48% over the past six months, reflecting the COVID-19 difficulties. According to Commsec, the A2 Milk share price is valued at 22x FY22’s estimated earnings.

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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. The Motley Fool Australia owns shares of APA Group and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 top ASX blue chip shares to buy appeared first on The Motley Fool Australia.

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