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Date : 25/09/2023

Top 3 ASX Blue-Chip Stocks

ASX is a premier destination for investors seeking lucrative investment opportunities. Amidst the vast array of corporations listed on the ASX, a few blue-chip stocks stand out for their exceptional stability, resilience, and growth potential. These stocks include the likes of Qantas Airways, Woolworths, and Endeavour Group, each of which has garnered significant attention from investors across the globe.

In this article, we will delve deeper into these ASX blue-chip stocks and explore why we believe they are poised for success in the long run. We will examine their current market position, analyse the strengths and opportunities contributing to their growth potential, and provide insights to help investors make informed decisions about their portfolios. By understanding the factors that make these stocks top performers, investors can profit from investing in them and reap significant returns in the future.

Qantas Airways Limited (ASX: QAN)

Qantas Airways Limited (ASX: QAN), a prominent company listed on the ASX, is widely recognised for its flagship airline brand and its subsidiary, Jetstar. However, the aviation industry has faced many challenges due to global events like the COVID-19 pandemic, and Qantas is no exception. Nevertheless, the company’s diversified operations, including a loyalty business boasting 15 million members and a robust freight division, have allowed it to maintain a multifaceted revenue stream.

We are confident in Qantas’s potential and have included it on our conviction list. Its shares are undervalued, particularly given its enhanced earnings capability. Despite declining revenues per unit and capacity, which currently stands at 95% of pre-COVID levels, the projected FY24 EPS is estimated to be 89% above pre-pandemic levels. However, the market capitalisation and EV are currently 1% and 13% lower than pre-COVID levels, respectively, indicating significant room for upward price movement. Our buy rating and $8.75 price target are therefore validated.

qantas airways limited shares

Woolworths Limited (ASX: WOW)

Woolworths Limited (ASX: WOW) is a well-established retail company with a strong foothold. With a diverse range of brands, including Countdown and Big W and its own supermarket chain, Woolworths has a loyal customer base that continues to grow. The company’s loyalty program has been a key contributor to this success, incentivising customers to continue shopping at their stores.

Another significant strength of Woolworths is its omnichannel strategy, which allows the company to manage costs and maintain stable margins. This approach enables customers to shop online or in-store and utilise click-and-collect services, providing a convenient shopping experience.

Considering these factors, we recommend buying Woolworths’ stock and setting a target price of $42. This target price reflects an 11% potential for gains and a strong return on investment. Additionally, investors can expect a 3% fully franked dividend yield, providing a steady income stream. Overall, Woolworths is an attractive investment opportunity, and it has the potential to provide significant returns for investors.

woolworths group shares

Endeavour Group Ltd (ASX: EDV)

Endeavour Group Ltd (ASX: EDV) has been identified as a major player in the beverage market, with a strong leadership position that appeals to investors. Compared to its peers in Staples, EDV is currently undervalued with a 19.3x FY24 P/E and a 12.9x FY24 EV/EBIT.

While higher interest costs may slightly impact sales and NPAT, our analysis shows that the market values EDV’s Hotels segment at a low 6.0x, significantly below the peer average of ~10x. We anticipate positive retail sales in 1H24, and with the resilience of its hotel operations, we have assigned a buy rating to EDV. Our recommended price target for EDV is $6.90.

Overall, EDV is a dominant player in the beverage market and, with its attractive valuation, presents a compelling investment opportunity. Our analysts have carefully evaluated all relevant factors and are confident that EDV is well-positioned to deliver strong returns in the near future.

Endeavour Group shares analysis


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