The ASX 200 index is home to a good number of quality blue-chip shares with strong business models and positive long-term growth outlooks.
But which ASX blue-chip shares could generate strong returns over the next 12 months?
Two that analysts are tipping as buys with big return potential are listed below. Here's what they are saying about them:
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ResMed Inc (ASX: RMD)
Goldman Sachs believes that the ResMed sell-off has created a compelling buying opportunity for investors.
It recently retained its buy rating with a $32 price target, which suggests a potential upside of 26% for investors over the next 12 months. Its analysts see asymmetric upside risk at current levels. They explain:
[W]e believe the perceived downside risk from GLP-1/GIPs has been over-capitalised at RMD's current valuation. Overall, we reduce our TP -3% (with our earnings upgrades offset by mark to market multiples today), and continue to see asymmetric upside risk from current levels and reiterate our Buy rating.
Treasury Wine Estates Ltd (ASX: TWE)
Another blue chip ASX share that could generate big returns for investors is wine giant Treasury Wine.
Morgans currently has an add rating and a $14.15 price target on its shares, which implies a potential upside of over 30% for investors over the next 12 months.
The broker was happy with its recent US acquisition and believes it will be a boost to its margins. It said:
It may take some time for the market to digest TWE's acquisition of Paso Robles luxury wine business, DAOU Vineyards (DAOU) for US$900m (A$1.4bn) given it required a large capital raising. The acquisition is in line with TWE's premiumisation and growth strategy and will strengthen a key gap in Treasury Americas (TA) portfolio. Importantly, DAOU has generated solid earnings growth and is a high margin business. It consequently allowed TWE to upgrade its margins targets. While not without risk given the size of this transaction, if TWE delivers on its investment case, there is material upside to our valuation.
In addition, Morgans highlights that the ASX blue-chip share could be given a major lift if China removes its tariffs. It adds:
The key near term share price catalyst is if China removes the tariffs on Australian wine imports.
