There are a couple of great ASX blue chip shares that are growing globally. I’d want them in my portfolio if I were focused on large caps.
Why blue chip ASX shares?
There’s no doubt that there are some wonderful smaller companies on the ASX. However, plenty of them are more volatile than large caps and some of them have a higher chance of failing in a recession.
Not every blue chip is worth owning though in my opinion. Businesses like Telstra Corporation Ltd (ASX: TLS), Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) are already at the peak of their power and market share. Australia doesn’t exactly have a huge population for businesses to work with.
However, there are a couple of ASX blue chip shares that I believe still can deliver solid long-term returns.
CSL Limited (ASX: CSL)
At times, CSL has been the largest business on the ASX. The giant biotechnology healthcare business has an array of different divisions including influenza vaccines and biotherapies. It has plasma collection centres across China, Europe and North America.
One of the best things about CSL is how much it’s willing to spend on research and development (R&D). Remember, it’s the investments into R&D that unlock new treatments, better vaccines and new products. That’s why CSL has more than 1,700 people dedicated to R&D and it has spent US$3.7 billion over the last five years to advance its product pipeline. It spends roughly around 10% of its revenue each year on R&D.
When you talk about ASX blue chip shares making a difference in the world, saving lives and improving lives is one of the most useful objectives you can have as a company. Plus, governments and people are going to want to spend that money on what CSL has to offer. It’s a pretty defensive business, really.
COVID-19 has changed the world. CSL is reporting that there is elevated levels of demand for its vaccine business, Seqirus. There was also solid growth in its core immunoglobulin portfolio. I don’t think CSL will see any long term negative impacts from COVID.
It generates earnings from lots of different places. CSL Behring generates earnings from across the world including North America, the EU and the Asia Pacific region.
Macquarie Group Ltd (ASX: MQG)
Macquarie is by far my favourite ASX bank. Unlike the big four ASX banks such as National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), Macquarie has a diverse array of businesses including Macquarie Capital and Macquarie Asset Management.
The global investment bank is actually one of the world’s largest infrastructure managers, which generates excellent levels of fees and profit each year for the business.
One of the main reasons I like this ASX blue chip share is that it only a third of its earnings are generated from domestic sources. It also makes high levels of profit from places like Europe and North America as well.
Its diversification strategy has proven to be very successful – just look at how its profit guidance increased after it was able to serve customers during the Texas winter weather.
As a diversified financial business, I like that Macquarie can invest almost anywhere in the world for growth – such as its recent US-based asset management acquisition. The focus on green and infrastructure investments could prove fruitful over the next decade.
Summary thoughts about ASX blue chip shares
There aren’t many strong ASX blue chip shares that still have plenty of growth potential – but I think CSL and Macquarie are two of my preferred ideas.
However, they certainly aren’t cheap. The Macquarie share price is back above $150 and CSL – whilst down in recent months – still has a hefty market capitalisation of around $120 billion.
