Telstra Corporation Ltd (ASX:TLS) and this ASX blue chip share have been named as buys. Here’s what you need to know…
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If you want to build a balanced portfolio, you might want to form the foundations with some blue chip ASX 200 shares.
But with so many to choose from, it can be hard to decide which ones to buy. To narrow things down for you, I have picked out two ASX blue chip shares that have been given buy ratings:
Sonic Healthcare Limited (ASX: SHL)
The first blue chip ASX 200 share to look at is Sonic Healthcare. It is a leading medical diagnostics company with operations across the world.
Sonic has been a very strong performer so far in FY 2021. During the first half, the company delivered a 33% increase in revenue to $4.4 billion and a 166% jump in first half net profit to $678 million.
While a key driver of this growth has been COVID-19 testing services, the rest of the business is performing positively as well. The latter also appears well-placed to benefit from a backlog in healthcare work. And with COVID-19 testing likely to continue for a little while to come, Sonic looks set to continue its growth in FY 2022.
In addition to this, due to its strong balance sheet, the company has the opportunity to boost its growth through earnings accretive acquisitions.
One broker that is particularly positive on the company is Credit Suisse. It currently has an outperform rating and $40.00 price target on the company’s shares.
Telstra Corporation Ltd (ASX: TLS)
A second blue chip ASX 200 share to look at is Telstra. It could be a good option due to its improving outlook, attractive valuation, and generous dividends.
In respect to its outlook, things are looking significantly better for Telstra thanks to its T22 strategy. This is cutting costs and making it a much leaner operation. In addition to this, the company’s leadership position in 5G internet looks set to boost its key mobile business in the coming years.
Another positive is the company’s plan to unlock value by monetising assets and splitting into three separate entities.
Ord Minnett is a fan of the company. It currently has a buy rating and $4.05 price target on its shares. The broker also believes Telstra can pay fully franked 16 cents per share dividends for the foreseeable future. Based on the current Telstra share price, this will mean 4.6% dividend yields.
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*Returns as of February 15th 2021
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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