Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Two beaten-down blue-chip buys
It could be a smart move to consider ASX blue chip shares during this period of intense volatility since the start of the year.
Blue chips are typically ones that have strong positions in the market and can offer more reliability in times of economic difficulties.
I’d only want to go for opportunities that are showing signs of good growth potential:
Xero Limited (ASX: XRO)
Xero could be the best blue-chip on the ASX. I think it could have the most growth potential over the long-term when looking at the A&P/ASX 20.
It has lots of great things that I look for good businesses. Xero has a very high gross profit margin, which is steadily climbing upwards. This means that every dollar of new revenue is more profitable than it was last year. The company is re-investing heavily to become a global power in the cloud accounting tech space.
I like that Xero is looking at growing in several new markets at once. South Africa, Singapore and Canada are all good countries to grow a presence in.
Over time, this ASX blue chip share may become one of the biggest businesses on the ASX thanks to its high margins and global subscriber base. Its platform is a very powerful tool for the company and subscribers.
The 36% fall of the Xero share price this year makes it a tempting proposition, in my opinion.
REA Group Limited (ASX: REA)
REA Group could be one of the very best ASX shares. It owns the high-performing realestate.com.au platform. The strength of this asset is that it has the most properties for sale, which attracts the most interested buyers. Because there are so many potential buyers, new sellers make sure they are listed with REA Group. It’s a very powerful cycle.
The ASX blue chip share is able to steadily increase prices over time, with little to no detrimental effect, showing how highly users value the service.
Over the longer-term, this platform effect could be repeated in other countries that still don’t have the same digital usage for real estate services. REA Group is invested in a number of other countries with digital platforms including the US, India and other Asian countries.
The REA Group share price has fallen by around 25% since the start of the year.
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