- The ASX 20 houses the 20 most valuable companies in Australia, giving investors a ready-made list of the largest of blue chips in Australia.
- The user base of Xero incorporates 1.56 million clients from the ANZ region and the remaining 1.18 million from the international region.
- At the end of Q3 FY21, Goodman’s occupancy rate was reported at 98%, with net property income increasing 3.3% over Q3 FY20.
Investing in blue-chip stocks is a relatively less risky approach. Blue-chip stocks are typically a robust business, having survived many business cycles, and are financially well off than other smaller competitors. The name ‘blue chip’ has been taken from the blue chips in poker, which are the most valuable chips in the game.
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These companies generally have dependable and consistent earnings and often pay dividends on a regular basis to their shareholders. More often than not, these large-cap companies are also the leaders in their sector. All these reasons are sufficient for low-risk and less-speculative investors to invest in in these blue-chip stocks.
So how large a company needs to be in order to qualify under the category of blue chip? Well, this is a debatable topic and there is no objective rule separating large caps from mid- and small caps. Generally, a company with a market capitalisation above US$10 billion could be termed as a blue chip. But again, some might not agree to it and might want to stretch the parameter up to maybe US$20 billion or more.
In Australia, the ASX 20 houses the 20 most valuable companies in Australia, giving investors a ready-made list of the largest of blue chips in Australia. Let’s have a look at 3 blue-chip stocks in Australia that could do well in July.
- Xero Limited (ASX:XRO)
First one in our list is an AU$20.13-billion technology company, Xero. The company provides cloud-based business and accounting solutions to small and medium enterprises (SMEs), and has a strong foothold in this space. In the latest count, Xero’s platform had an active user base of approximately 2.74 million businesses worldwide. This user base incorporates 1.56 million clients from the ANZ region and the remaining 1.18 million from the international region.
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Given the size of the ANZ market compared to the rest of the world, the company has a huge opportunity to tap global market to grow multifold over the next decade. In addition to this, due to the seamless and ever-growing app ecosystem of the company, it has the opportunity to squeeze more revenue from its current user base. It is due partly to the potential of its app ecosystem that the company is expected to do well in the long run.
Currently, the XRO share price is trading 0.78% up, at AU$137.03.
- Goodman Group Limited (ASX:GMG)
Goodman Group is an AU$38.79-billion leading, integrated commercial and industrial property business, having a total of AU$52.9 billion assets under management (AUM) across the globe. Among its portfolio are businesses and office parks, large-scale logistics facilities and warehouses. All of them are leased to high-quality clients such as Coles Group Limited (ASX:COL), Amazon, Showpo, Walmart, to name a few.
At the end of Q3 FY21, the company’s occupancy rate was reported at 98%, with net property income increasing 3.3% over Q3 FY20. The management says this denotes strong demand for its properties, which continues to be supported by tight supply in urban infill locations, long-term supply chain requirements and high quality of its assets. In addition to this, Goodman also has AU$9.6 billion of development work in progress. The current share price of GMG is AU$20.94.
- Sonic Healthcare Limited (ASX:SHL)
Sonic Healthcare is the last one on our list. This global pathology and medical imaging provider was one of the top performers in the last one year, delivering a solid ~24% return. This beats the broader market index, the ASX 200 index, as well as the Australian healthcare index’s 18% return.
Sonic Healthcare 1H FY21 result was full of robust numbers, including revenue growth of 33% to AU$4.4 billion, EBITDA growth of 89% to AU$1.3 billion and a 166% growth in net profit, to AU$678 million. In June 2021, Sonic Healthcare took a significant step, acquiring the Canberra Imaging Group (CIG). The management called this an important step in the development of its imaging division business in Australia.
On 30 June 2021, Sonic shares hit a record high of AU$38.51. Currently, the SHL share price is trading at AU37.87, slightly down from its recent peak.