ASX blue chip shares are businesses that have the capability of both reliability and potential long-term growth.
I wouldn’t put businesses like BHP Group Ltd (ASX: BHP) or Telstra Corporation Ltd (ASX: TLS) in my portfolio because their medium-term and long-term profit growth is far from certain.
But I do believe that these two ASX blue chip shares are quality options in the ASX 50:
Macquarie Group Ltd (ASX: MQG)
Macquarie is by far my preferred financial pick of the large cap ASX shares.
Unlike the other big ASX banks, it’s not reliant on the mortgage market to generate profit. I think that’s an area of slow growth because it’s essentially a commodity product and total loan growth is pretty slow.
What I really like about Macquarie is its global operations. It has divisions generating earnings right across the world. That gives it good diversification and allows it to invest in any market in the world.
Macquarie has a substantial amount of earnings from defensive businesses, particularly from its assets management division. It’s one of the biggest infrastructure asset managers in the world.
The global investment bank recently reported its FY21 result came in at $3 billion, which was a 10% increase on FY20.
Sonic Healthcare Ltd (ASX: SHL)
Sonic is another ASX blue chip share that I’d really like to have in my portfolio.
The pathology business is partly a COVID-19 play for me. It has been doing millions of COVID-19 tests for its markets in the US and Europe.
Thankfully, the vaccinations are helping reduce the spread of COVID-19 in the northern hemisphere, but there’s still some way to go for a large proportion of people to be vaccinated and there’s a risk of other variants causing problems.
The COVID-19 testing is causing a dramatic jump in earnings for Sonic – FY21 half-year profit was up 166% to $678 million.
However, if COVID-19 testing calms down dramatically then its non-COVID operations can recover and grow further. There’s also the possibility of COVID-19 immunity testing growing into the future.
If Sonic can make a smart acquisition with all of this COVID-19 testing cashflow then it could lock-in much more growth for the non-COVID earnings per share (EPS).
