TPG Telecom Ltd (ASX: TPM) shares and NIB Holdings Limited (ASX: NHF) shares appear priced to perfection, yet it is easy to see the potential for them to become tomorrow's ASX blue chips.
Future blue chips
Around 25 years ago, you could have bought Commonwealth Bank of Australia (ASX: CBA) shares for $6 – it's now $82. You could have purchased CSL Limited (ASX: CSL) shares for $12 in 2003 – it's now $135.
My point?
If you are a long-term investor, you want to invest more of your money in tomorrow's blue chips – not today's.
It's easier said than done, of course. But if you can buy a diversified portfolio including some faster growing medium-sized companies you will be well on your way to generating respectable returns.
TPG Telecom
TPG Telecom is the $5 billion Australian telecommunications company. Some might say it is already a blue chip by Australian standards. However, I think it could experience much more growth over the medium to long term. With its spending on fibre and mobile networks locally and abroad, I think TPG Telecom could have more in store for long-term investors.
NIB Holdings
NIB is one of Australia's leading private health insurers. Like TPG, NIB has experienced exceptional growth over the past five years. With insurance premiums rising each year and the government prompting many people to get health coverage or pay higher taxes, it's easy to see why all health insurers are growing strongly. However, even amongst its peer group, NIB continues to experience strength.
Foolish Takeaway
The ASX is filled with slow-growing blue chip companies. Many of which are not likely to grow at above-average rates over the next decade, in my opinion.
Further down the market, tomorrow's blue chip companies may be priced to perfection, but they could continue to grow strongly for many years.
In my opinion, investors could do worse than add NIB Holdings or TPG Telecom shares to their watchlists.
