3 ASX blue-chip shares to buy before the market turns

Falling share prices have given us a once in a generation opportunity to buy great ASX blue chip shares at cheap prices.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

The falling share market has provided investors with some of the best value investments for a generation. Market inefficiency has underpriced some of the best blue-chip shares on the ASX. In some cases, dropping their share prices to lower levels than what we've seen for years. 

The old cliche is true; markets come down on an escalator and go up via the steps. However, with interest rates even lower, I believe there is every chance of an explosive recovery if COVID-19 turns out to be more manageable than expected. 

All of the ASX shares listed below have sustained their 'Buy' recommendations from major brokerage houses. 

The bluest of blue

Woodside Petroleum Limited (ASX: WPL) is an iconic Australian company. With 65 years of experience, it was at the vanguard of the creation of an entirely new industry. 

The Woodside Petroleum share price is currently lower than it has been since September of 2016, falling 16% last week and a further 2% so far in the current week. 

In FY19, the company reported a reduction in net profit after tax (NPAT) of 74.8%. Last month, it also announced the reduction of its ownership of the Scarborough project with BHP Group Ltd (ASX: BHP) by 1.5%.

However, the company's gross margins are at 44%, its break-even costs have reduced by 27%, and its growth projects are global. In my view, Woodside is clearly undervalued and an expert at managing the realities of the LNG market.

Underpriced large-cap engineering company

The Worley Ltd (ASX: WOR) share price dropped by 11% last week and a further 2.2% this week. Aside from a short dip in December 2018, Worley shares have not been this low since August of 2017. Worley's current price to earnings (P/E) ratio of 16.6 is historically one of its lowest.

The blue-chip share's 1H20 earnings delivered an increase in underlying net profits after tax and amortisation (NPATA) of 110%, an increase in free cash from $21 million to $277 million, and a backlog of work worth $18.7 billion.

Yesterday, Worley announced a large contract win for a subsidiary of BP Plc. Meanwhile, on Tuesday, the company announced an increase in holdings by one of its directors through an on-market trade.

Worley is tragically underpriced, in my opinion, and is a rare opportunity for value investors. 

Solid performing utility and rare low price

Ausnet Services Ltd (ASX: AST) is Australia's largest transmission network and has total assets of greater than $13 billion. This blue-chip ASX share is trading at a P/E ratio of 24.05. This earnings multiple is historically low and below the average of large-cap and mid-cap companies in the sector. 

The Australian Energy Regulator (AER) noted AusNet is consistently leading in productivity on its benchmarking reports and the company has a return on capital employed (ROCE) of above 7% for the past 3 years. This indicates a very economical use of capital. 

Foolish takeaway

In my view, the inefficiency of the market and the madness of crowds has thrown up some of the greatest opportunities in blue-chip shares since the Dot Com crash. Not one thing has changed for these companies. They all remain well-managed, strong performers.

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Best Shares

A happy couple drinking red wine in a vineyard.
Best Shares

5 ASX 200 shares just upgraded to strong buy ratings

The experts say these 5 shares are set to rise over the next 12 months.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Best Shares

If I could only own 1 ASX stock, it would be this one

This stock offers investors a bit of everything.

Read more »

a girl stands in an apple orchard holding two red apples in raised arms with a happy, celebratory look on her face with a large smile and a pretty country background to the picture.
Best Shares

Top ASX shares to buy in March 2025

Looking to plant some new investment seeds right now?

Read more »

A woman walks along the street holding an oversized box wrapped as a gift.
Best Shares

Top ASX shares to buy following earnings surprises

Who doesn't love a surprise?

Read more »

Businessman smiles with arms outstretched after receiving good news.
Best Shares

Here are 3 of my most profitable investments in ASX shares ever (and which one I'd buy more of right now)

I reckon only one of these shares is worthy of a buy today.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Best Shares

Top oversold ASX shares to buy in February 2025

Hoping to bag an investment bargain this month?

Read more »

Close-up of a business man's hand stacking gold coins into piles on a desktop.
Best Shares

6 ASX 200 shares that could benefit from a weak Australia Dollar

This expert reckons a low dollar is unearthing opportunities.

Read more »

Two kids are selling big ideas from a lemonade stand on the side of the road for cheap!
Best Shares

Top ASX shares to buy in February 2025

Worried there are no great-value ASX shares left to buy? Our Foolish writers reckon these five are worth a good…

Read more »