Buying quality blue chips on the S&P/ASX 200 Index (ASX: XJO) such as Wesfarmers Ltd (ASX: WES), Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) at bargain prices could reward investors over the long run.
In times of market turbulence, investors flee to the exits hoping that at some point they will buy in at the market bottom, only to discover they may have sold at the wrong time and regret the decision.
Warren Buffet has said be "fearful when others are greedy and greedy when others are fearful." I believe investors will do well by following this advice. To that end, here's a closer look at the 3 ASX 200 blue chips mentioned above and why they could make a good addition to your portfolio today.
Wesfarmers
Wesfarmers shares hit a 52-week high of $47.42 about a month ago, and are now currently trading at $37.96 (as of Tuesday's close). Despite the recent falls in this blue chip, the Wesfarmers share price has increased 10% over the past 12 months.
Amid the current crisis, The Age reports a spokesperson from Officeworks (one of Wesfarmers' brands) said the company had seen a spike in sales of home office products as people prepare for potential self isolation measures. The article reports that Kmart has also seen more demand in office chairs and standing desks.
Despite the reduction in its shareholding in Coles, Wesfarmers retains a 10% stake in Coles Group Ltd (ASX: COL), which has also seen incredible demand for products amid the ongoing coronavirus crisis.
The government stimulus for welfare recipients and small businesses could also help sales pick up further and help reduce the impact of the coronavirus on retailers.
Commonwealth Bank
After the Commonwealth Bank share price achieved a 52-week high of $91.05 a month ago, its shares have been smashed in the market panic and are trading at $67.64 at time of writing.
In my view, the civil proceedings launched by ASIC against CommBank, the net interest margin pressure and the slow down in the economy is beginning to be reflected in the share price.
The legal proceedings and the economy should resolve in time, and picking up this blue chip today may reward investors over the long term.
BHP
Similarly, BHP shares are trading at what could be considered a price of $28.21, compared to their 52-week high of $42.33.
Amazingly, the iron ore price has been resilient despite the economic shock caused by the spread of the coronavirus. As BHP is the world's lowest cost producer of iron ore, the market price of this blue chip looks to be attractive for investors now and over the long term.
In my view, BHP is also resilient to the changing requirements of the world with its diversified range of essential commodities.
Foolish takeaway
While these prices may not be at the market bottom, the recent sell-off presents long term investors more value than a month ago. Potential greater future profits and dividend payments after the economy recovers should reward patient investors.
I don't believe that anyone knows what is going to happen, which is why investors shouldn't try to time the market. If history is a guide, the market should recover and reach new highs.
