One group of shares that is particularly popular with retail investors are blue chips.
A blue chip share is a large and well-established company that has operated for many years and is more often than not a leader in their industry.
The Australian share market is home to a large number of them and investors no doubt have a hard time deciding which ones to buy.
In light of this, I have taken a look at three popular blue chip shares to see if they are in the buy zone right now. They are as follows:
Telstra Corporation Ltd (ASX: TLS)
After falling out of favour with investors over the last few years due to its earnings decline, this telco giant is once again one of the most popular blue chip shares on the Australian share market. And it isn't hard to see why. With its dividend being cut down to a sustainable level, rational competition returning to the telco industry, the launch of 5G, and a significant cost cutting plan, the company's outlook has improved greatly. In light of this and its reasonable valuation, I think Telstra would be a good option for investors. Another bonus is that its shares offer an estimated forward fully franked 4.2% dividend yield.
Treasury Wine Estates Ltd (ASX: TWE)
Treasury Wine Estates is one of the biggest wine companies in the world. Thanks to the growing demand for its portfolio of wines across the globe, it has achieved strong profit growth over the last decade. Pleasingly, this has continued to be the case in FY 2019 with the company posting a 19% lift in first half EBITS to $338.3 million. Looking ahead, management expects its EBITS growth to accelerate in the second half to result in ~25% growth for the full year. After which, it is targeting earnings growth of between 15% to 20% in FY 2020. I think this positive outlook makes Treasury Wine Estates worthy of consideration.
Woolworths Group Ltd (ASX: WOW)
Another popular blue chip share is this retail conglomerate. And whilst I'm a big fan of the company and its numerous brands, I'm not a big fan of its current valuation. At approximately 27x estimated full year earnings, I think Woolworths' shares are a touch expensive even after factoring in the positives from its demerger plans. These plans will see the company combine its Endeavour Drinks and ALH Group businesses into a single entity and then spin it off. I see more value in rival Coles Group Ltd (ASX: COL) shares at this point.
