2 strong blue chip ASX shares rated as buys by brokers

 There are some blue chip ASX shares rated as buys by brokers.

It can sometimes be worth taking into account what brokers think because they are constantly looking at which shares look good value and what investments could make money. They have access to research and tools that many retail investors don’t.

Here are two blue chip ASX shares that brokers really like:

Australia and New Zealand Banking Group Ltd (ASX: ANZ)

The big four ASX bank share is rated as a buy by at least six brokers.

There have been a number of factors that brokers like about the major banks right now.

Credit Suisse has pointed out that one catalyst for the banks providing better returns for shareholders is the Australian Prudential Regulation Authority (APRA) ending the requirement for Australian banks to hold onto at least 50% of their statutory earnings.

There are other catalysts for the big banks according to brokers. The concerns about the Australian economy are dissipating and the news of the effectiveness of COVID-19 vaccines has seen a shift to value ASX shares, such as the big banks.

Australia’s strong house prices could be helpful for the banks in ensuring that bad debts don’t become too significant. There will also be the benefit of the credit provision top-ups not being repeated again.

Some brokers, such as Citi, believe that ASX bank shares’ net interest margins (NIM) won’t decline any further and that the market may still be too negative about the big banks’ upcoming results.

According to Commsec, the ANZ share price is valued at 13x FY22’s estimated earnings. Commsec also has an estimate of an annual dividend of $1.20 per share for FY22, which equates to a grossed-up yield of 7.25%.  

Brickworks Limited (ASX: BKW)

Brickworks is rated as a buy by at least six brokers.

This ASX share is a market leader of bricks in Australia. It has a number of brick brands including Austral Bricks, Bowral Bricks and Daniel Robertson.

It also sells other products like pavers, masonry, stone, roofing, specialised building systems, precast and cement. It’s represented in these categories by businesses like Austral Masonry, Urban Stone, Bristle Roofing, Terracade, Pronto Panel and Austral Precast.

In a recent trading update, Brickworks said that its Australian building products division has made a strong start to FY21 with first quarter earnings well ahead of the prior corresponding period.

Brickworks also has an American building division after making some acquisitions like Glen Gery. The company is already the market leader in the north east of the US. It has long-term growth plans there and wants to increase efficiencies across its manufacturing network. COVID-19 is hurting short-term growth, with sales below expectations in recent months. This is partly due to the deferral of projects. 

The ASX share also has two other assets.

Brickworks owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has steadily grown earnings and dividends for Brickworks. Soul Patts has a diversified portfolio in sectors like telecommunications, resources, listed investment companies (LICs) and agriculture.

The other main asset that Brickworks owns is a 50% stake of an industrial property trust alongside Goodman Group (ASX: GMG). This joint venture trust builds industrial properties like warehouses on Brickworks’ excess land that it no longer needs.

At the moment the trust is building two huge warehouses, one for Coles Group Ltd (ASX: COL) and one for Amazon. These buildings show that Brickworks can gain exposure to the e-commerce and logistics trend.

Once the two warehouses are completed over the next couple of years, it’s expected that the profit distributions to Brickworks will increase by at least 25% and the gross assets of the trust will rise above $3 billion.

More reading

• 2 ASX shares rated as strong buys by brokers
• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• ASX 200 down 2.3%: Bank shares tumble, InvoCare jumps, IOOF disappoints
• 2 top ASX dividend shares to buy in February
• 3 ASX dividend shares to buy in February 2021

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 strong blue chip ASX shares rated as buys by brokers appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/39zPLgI