I believe there are a few ASX stocks with blue chips that have better futures than the market gives credit to.
Every business on ASX (and other global stock exchanges) has a stock price. The stock price has built-in expectations – future profits, how much income can grow, market share, potential dividends, etc.
One way to beat overall market returns is to find potential investments that the market seems to underestimate. In my opinion, these two stocks with ASX blue chips have convincing futures:
Telstra Corporation Ltd (ASX: TLS)
Everyone knows about Telstra, the leading telecommunications business in Australia.
Its cost-effectiveness of death has been well publicized over the past few years. In principle, it receives much less revenue from NBN customers than before, when they were customers of Telstra’s own broadband network.
However, I think the market underestimates how much more profitable Telstra may become in the future as more households move to home broadband 5G. This could mean higher speeds for customers, but also a much better profit margin for Telstra, because NBN will not receive a significant portion of revenue.
I also like Telstra’s diversification games, such as energy, international telecommunications and health. I think these are good games to diversify and increase profits for the share of ASX blue chips.
As a bonus, don’t forget that Telstra continues to pay solid dividends.
Fortescue Metals Group Limited (ASX: FMG)
First, let me say that I think the share price of Fortescue may be a little more expensive, above $ 21.50, where the price of iron ore is now.
However, in the long run, I think Fortescue’s green efforts with Fortescue Future Industries (FFI) could prove very beneficial to the company. This will reduce dependence on the Chinese who buy a lot of iron.
But also, FFI is working in a field of very rapid growth. If the world wants to achieve the emission reduction targets discussed, trillions of dollars may need to be allocated to green initiatives.
Fortescue has a whole list of projects he is working on. Acquisition of c Williams Advanced Engineering (WAE) instantly makes FFI a player in the world of batteries, plus it brings a tangible revenue to the unit. What worries me most is the FFI’s plan to produce large amounts of green hydrogen. He already has a client – E.ON – for Fr. a third of its production of renewable hydrogen until 2030. Given high lithium prices and the lack of infrastructure for electric vehicles in the world, I think green hydrogen could challenge battery-powered vehicles and other areas that require energy.
If / if the price of iron ore falls below $ 100 per tonne, I will be interested to consider additional Fortescue stocks. Green zones look very positive for the share of ASX blue chips. .