2 ASX 200 blue chip shares that might be the best to buy

Wesfarmers and Magellan are two ASX 200 blue chip shares that could be worth looking at.

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There are some S&P/ASX 200 Index (ASX: XJO) blue chip shares that might make good long-term investments.

Businesses that have a strong market share and good competitive position have the potential to keep doing well.

The below two businesses are among the leaders at what they do:

Wesfarmers Ltd (ASX: WES)

Wesfarmers is a diversified company with a number of businesses including Bunnings, Kmart Group and Officeworks. Those three businesses may be the leaders of their respective categories in Australia.

The company recently announced a potential diversification move with an offer for Australian Pharmaceutical Industries Ltd (ASX: API) at $1.38 cash per share.

Wesfarmers said that if the takeover is successful, API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector.

Management said the combination is a compelling opportunity to capitalises on API's strength in the growing health, wellbeing and beauty sectors, whilst drawing on Wesfarmers' capabilities in retail and distribution.

This is the latest move by Wesfarmers to grow and diversify its business. It wasn't long ago that the ASX 200 blue chip share announced it would be expanding into lithium mining.

Bunnings is one of the leading retail businesses in Australia with a very high return on capital. Wesfarmers has been looking to grow its hardware segment with both Adelaide Tools and the acquisition of Beaumont Tiles. It's also looking to improve its commercial offer to better service builders, tradespeople and organisations.

At the current Wesfarmers share price it's valued at 28x FY22's estimated earnings according to Commsec.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is one of the largest asset managers in Australia.

It's currently rated as a buy by the broker Morgans with a price target of around $58 over the next 12 months.

The broker pointed to the growth of its funds under management (FUM) as a reason to be positive about the business.

The ASX 200 blue chip share recently announced that it finished June 2021 and FY21 with total FUM of $113.9 billion. Average FUM for the year ending 30 June 2021 was $103.7 billion, up from $95.5 billion from FY20.

However, for the quarter ending 30 June 2021, Magellan experienced net outflows of $351 million which comprised of net retail outflows of $260 million and net institutional outflows of $91 million.

The broker also noted that the fund manager's starting FUM for FY22 is around 10% higher than the average FY21 figure.

Magellan has been investing in external businesses to achieve growth away from its funds management business. Two of the investments include Barrenjoey and Guzman y Gomez.

According to Morgans, Magellan is priced at 21x FY22's estimated earnings with a forward projected partially franked dividend yield of 4.5%.

Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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