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2 ASX-listed blue-chips under the spotlight in 2021

  • January 15, 2021 10:00 AM AEDT
  • Kunal Sawhney
    CEO Kunal Sawhney
    2314 Posts

    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

2 ASX-listed blue-chips under the spotlight in 2021

Summary

  • Blue-chip companies are long-established, well-known, and have strong financial position.
  • Amid political and economic uncertainty, blue-chip space may be evaluated from investment standpoint.
  • Cochlear (ASX:COH), with its suite of new products and Domino’s (ASX:DMP), leveraging from the rise of digital catering seem to be promising blue-chip prospects.
Gold MTF non-AMP

The ability to generate a steady dividend stream has been a stronghold of companies deemed blue chips. Synonymous with quality and dividends, ASX-listed blue chips have been well run large-sized industry leaders. Investors often consider blue-chip stocks to be reliable shining stars in their investment portfolios.

Companies like the big four banks, telecom giant Telstra Corporation Limited (ASX:TLS), Australian biotech leader CSL Limited (ASX:CSL) and the top 20 companies listed on the S&P/ASX 200 are ideally treated as blue-chips.

Interestingly, with the idea of a digital economy becoming the new normal by the day, companies like Afterpay Limited (ASX:APT) could also become part of the blue-chip bunch.

In this backdrop, let us look at two blue-chips that seem to be promising prospects for FY21-

Cochlear Limited (ASX:COH

Cochlear is a global leader in the design, production, and sale of implantable hearing devices. The Company has been a strong performer over the last decade, due to its industry-leading product range and increasing product demand from the ageing population.

Cochlear has been securing an impressive market share in the US where its products are one of the most highly rated ones. The stock traded at $189.6 on 14 January 2021.

In Q121, cochlear implant constant currency (CC) revenue was 94% of Q120. Services revenue continues to recover with Q1 CC revenue at ~ 86% of Q120.

Besides, the Company’s outlook seems to be quite promising. In FY20, Cochlear invested $185 million of its revenue on research and development. The Company’s management forecasts this amount to rise between $190 million and $195 million in FY21.

“We have a suite of new products that are just starting to be launched and are generating excitement and great feedback”, says CEO & President Dig Howitt.

New product approvals (Source: COH’s AGM Presentation, Oct 2020)

RELATED READ: 3 Large caps for Long Term: Telstra (ASX:TLS), Cochlear (ASX:COH) & Woolworths (ASX:WOW)

 Domino’s Pizza Enterprises Limited (ASX:DMP)

The world-famous pizza chain operator, Domino’s Pizza Enterprises is targeting strong growth over the long term, especially via expansion of its store network. Australia, New Zealand, Luxembourg, the Netherlands, Japan, Belgium, France, Germany, and Denmark markets are the key targets.

Amid the pandemic and the year of digital food ordering, Domino’s experienced online growth and continues to savour it. Online sales in FY20 were $2.35 million, up 21.4% relative to pcp. Notably, the Company has expanded its return on equity, from 20.4% in FY11 to 40.8% in FY20. It also maintained its 70% dividend payout ratio. The full-year dividend was 119.3 cps, up 3.3% on pcp.

FY20 Results (Source: DMP’s AGM Presentation, Nov 2020)

In FY20, there were 2,668 Domino’s stores across these countries. Notably, by 2033, the Company may more than double its network size to 5,500 stores- without counting the potential expansions into any new territories.

Besides, Domino’s also has the target to grow its store sales by 3% to 6% each year. The stock traded at $82.1 on 14 January 2021.

If one is willing to build a balanced portfolio, incorporating a few ASX-listed blue-chips shares could be a smart move. Well-known, long-established companies with strong financial and operational footing is perhaps offering the opportunity to make seemingly promising long-term investments.

ALSO READ: 5 bluechip stocks that outshone in 2020

 

 


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