The Australian share market is filled with a number of well-known and popular blue chip shares.
But it is important to remember that just because a share has blue chip status, it doesn't necessarily mean it will be a good investment.
With that in mind, are these blue chip shares in the buy zone?
Coca-Cola Amatil Ltd (ASX: CCL)
In the first half of FY 2018 this beverage giant posted a 5.9% decline in underlying net profit after tax. The company's Australian Beverage's segment acted as a major drag on its performance, posting a decline in EBIT of 3.6% to $176.3 million. This segment, which is its biggest contributor to earnings by some distance, appears to be struggling for growth due to changing consumer habits. While the company does have plans in place aiming to turn things around and its shares are changing hands on reasonably low multiples, I'd suggest investors wait for a return to growth before investing.
CSL Limited (ASX: CSL)
I think that this global biotech star is one of the best blue chip shares on the local market. And thanks to a recent pullback in its share price, now could be an opportune time to pick up shares with a long-term view. After all, with a growing plasma collection network, a strong core business, a lucrative pipeline of products, and a fast-growing influenza business, I think CSL is capable of growing its earnings at a solid rate for many years to come.
Woolworths Group Ltd (ASX: WOW)
Last month this conglomerate released its full year results and revealed a net profit after tax of $1,676 million, up 13.1% year on year. While I felt this result was strong, unfortunately its trading update for the first few weeks of FY 2019 was surprisingly weak. A slowdown in comparable sales growth from its Australian Food business and the success of rival Coles' latest marketing campaign look likely to result in a much softer performance in FY 2019. So with its shares changing hands at 22x earnings at present, I think it would be best to wait for an entry point at a lower level.
