5 undervalued blue chip shares for 2016

With the local share market getting off to a positive start this week, helped by strong gains in the energy and financial sectors, I went in search of some undervalued blue-chip growth shares in the S&P/ASX 200 (Index: ^AJXO) (ASX: XJO).

Growth Shares

Growth shares are those companies which are typically growing earnings and/or revenue faster than their industry or the overall market. Some growth companies pay little or no dividends, preferring to use the income instead to finance further expansion. While others, will choose to pay dividends.

Below is a list of 5 blue chip companies. They have stronger average earnings growth than their industry average over the past 3 years, and look cheap compared to their forecast p/e's. They also all offer handy dividends and therefore could offer a great mix of income and growth.

1. Australia & New Zealand Banking Group Limited (ASX: ANZ).

As can be seen from the chart below, over the last 3 years, ANZ's earnings growth has averaged 7.46%. This is better than the industry average growth of 4.23%*. ANZ currently trades on a p/e of 9, and a forecast p/e** of 9.13.

*(Source:Commsec.com.au), ** (Source:Morningstar)

2. Westpac Banking Corp (ASX: WBC)

As can be seen from the chart below, over the last 3 years, Westpac's earnings growth has averaged 4.32% annually. This is better than the industry average growth of 4.23%*. Westpac currently trades on a p/e of 12.26, and a forecast p/e** of 12.21.

*(Source:Commsec.com.au), ** (Source:Morningstar)

3. Suncorp Group Ltd (ASX: SUN)

As can be seen from the chart below, over the last 3 years, Suncorp's earnings growth has averaged 31.80% annually. This is better than the industry average growth of -4.33%*. Suncorp currently trades on a p/e of 13.24, and a forecast p/e** of 12.56.

*(Source:Commsec.com.au), ** (Source:Morningstar)

4.Macquarie Group Ltd (ASX: MQG)

As can be seen from the chart below, over the last 3 years, Macquarie's earnings growth has averaged 27.23% annually. This is better than the industry average growth of 14.58%*. Macquarie currently trades on a p/e of 15.57, and a forecast p/e** of 12.7.

*(Source:Commsec.com.au), ** (Source:Morningstar)

5.Commonwealth Bank of Australia (ASX: CBA)

As can be seen from the chart below, over the last 3 years, earnings growth at CBA has averaged 4.24% annually. This is better than the industry average growth of 4.23%*. CBA currently trades on a p/e of 14.82, and a forecast p/e** of 13.92.

*(Source:Commsec.com.au), ** (Source:Morningstar)