If you want to build a balanced portfolio, having a few blue chip ASX 200 shares could be a smart move. But with so many to choose from, it can be hard to decide which ones to buy.

To narrow things down for you, I have picked out two ASX blue chip shares that are highly rated:

Goodman Group (ASX: GMG)

The first blue chip ASX 200 share to look at is Goodman Group. It is a leading integrated commercial and industrial property company with operations across the world. Among its portfolio are warehouses, data centres, large scale logistics facilities, and business and office parks.

Goodman currently has $62 billion of total assets under management and over 1,600 customers globally. Among the latter are the likes of Amazon, Coles Group Ltd (ASX: COL), DHL, Showpo, and Walmart.

Demand for its properties has been strong and has underpinned sky high occupancy rates and stellar earnings growth over the last decade.

This demand is being driven by the success of Goodman’s strategy. That strategy has seen the company develop modern, high quality properties in key gateway cities around the world. It notes that this has shortened the distance between businesses and consumers and put its customers ahead of the market.

Morgan Stanley has been impressed with Goodman’s performance and appears confident its positive form can continue. It has an overweight rating and $26.50 price target on Goodman’s shares.

Sonic Healthcare Limited (ASX: SHL)

Another ASX 200 blue chip share to consider is Sonic. It is one of the world’s leading healthcare providers with operations in Australasia, Europe and North America.

Sonic currently employs more than 1,500 pathologists and radiologists, and more than 10,000 medical scientists, radiographers, sonographers, technicians, and nurses.

This strong network, and particularly its pathology business, has allowed the company to thrive during the last two years while many other healthcare companies have struggled. This has been due to its exposure to COVID testing and the resilient performance of its non-COVID testing businesses.

One broker that has been very impressed is Morgans. It remains confident on its outlook and currently has an add rating and $45.98 price target on Sonic’s shares.

The post 2 excellent blue chip ASX 200 shares to buy now appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare 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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The Brickworks Limited (ASX: BKW) share price is underperforming the S&P/ASX 200 Index (ASX: XJO).

Brickworks shares are down 1.5% in November 2021, whilst the ASX 200 has gone up by 1.9%. Whilst 3.4% underperformance is not that much, it is a noticeable for just a two-week period.

What may be influencing the Brickworks share price?

Brickworks is a large shareholder of the investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Changes of the share price of Soul Patts then changes the underlying net asset value of Brickworks.

Soul Patts shares have declined 3% since the start of November 2021 and it’s down 10% in the last month. The investment conglomerate has declined more than 20% from 28 September 2021.

Brickworks recently gave a presentation at the ASX CEO Connect on 12 October 2021. It noted how much of the overall inferred asset backing the Soul Patts shares were. Of the total Brickworks net value of $4.84 billion, the Soul Patts market value was $3.41 billion.

For completeness, other assets made up the rest of the value. Its 50% share of the industrial property trust had a net asset value of $911 million. Its building product operations have net tangible assets of more than $1 billion. The business also has $519 million of net debt.

Brickworks also noted that its building product asset value includes land, both operational and surplus, with a market value that is “significantly higher” than book value.

Do analysts think the Brickworks share price is good value?

Analysts are somewhat mixed on the business. There are a few neutral/hold ratings on the business.

For example, Morgans currently rates Brickworks as a hold with a price target of $25.72. The broker thinks that Brickworks’ property division is going to have a good FY22 and that building products can continue to go through a recovery.

However, there are others that are more positive. One of the most bullish is Citi, with a price target on the Brickworks share price of $30. Analysts at Citi are also positive on the building product markets in both Australia’s key markets and the US. Property is also a positive for Citi.

Expectations of property growth

Brickworks says that it’s currently undergoing a period of unprecedented development within the property trust, fuelled by structural tailwinds that are driving “strong demand” for prime industrial property.

The completion of pre-committed developments over the next two years will result in an uplift of around 60% in rent and leased asset value, from the current level.

Management said that the new property developments are increasingly sophisticated, incorporating features such as robotics, automation and multi-storey warehousing. The development of these advanced facilities has become a critical competitive advantage for many businesses in the new economy and “will continue to support the increasing value of the property trust”.

One of the current large projects is the new, huge Amazon facility in Sydney at its Oakdale West estate.

When Brickworks released its FY21 result, it said that in addition to the pre-committed developments, a further 227,900 square metres of gross lettable area (GLA) is available for development within the trust, and this provides further opportunity for growth in the years ahead. This may be able to assist the Brickworks share price in the future.

The post Why is the Brickworks (ASX:BKW) share price having such a lousy month? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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The Xero Limited (ASX: XRO) share price was undeterred by a less than positive broker note from Macquarie today.

By the end of the session, shares in the cloud-based accounting software provider were up 2.5% to $145.84. In contrast, the S&P/ASX 200 Index (ASX: XJO) gained 0.28% today. Following the move, the Xero share price is now only 7.6% away from its 52-week high of $157.99.

So, what did Macquarie have to say about one of the largest listed tech companies in Australia?

US market, hard to get Intuit

Four days after Xero released its half-year results, Macquarie analysts have painted a bearish view of the Australian accounting platform.

Although the company posted year-on-year revenue growth of 23% to NZ$505.7 million, the broker retained its underperform rating on the Xero share price.

The negative viewpoint mirrors that of the market upon the release of Xero’s results on Thursday last week. On that day, shares in the company sank 6.2%. This was largely due to reality not being on par with expectations.

For Macquarie’s analysts, the problem revolves around the company being too focused on its North American market, according to the broker note. Simultaneously, there are concerns about the Australian and New Zealand market becoming saturated.

While Xero’s management is prioritising growth in the North American market, analysts at Macquarie believe the established competition might be too much to combat. The competition in question is US-based QuickBooks owner Intuit Inc (NASDAQ: INTU).

Here’s what Macquarie analysts had to say:

Given their size, capital and penetration of the US market, we think Xero will have limited success competing against QuickBooks in the US,

For these reasons, the broker tagged the Xero share price with a price target of $130. This would suggest a potential downside of nearly 11%.

What do other analysts think of the Xero share price?

On Friday, my Fool colleague James shared a different take on the Xero share price from another analyst. The team at Citi felt that the weakness in Xero shares presented a buying opportunity.

Although Citi expected stronger numbers from the ASX-listed tech company, it still went ahead and upgraded Xero to a buy. Alongside the rating upgrade, Citi set a price target of $160 per share on the software provider.

The post Xero (ASX:XRO) share price shrugs off Macquarie warnings of ‘limited success’ in US appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. 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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The COP26 Summit on climate change action has been a source of enlightenment for many investors around the world, lifting the veil on how the world intends to tackle the contentious issue.

Whilst many nations have secured their “phasing down” of coal use from the summit, a report from the Investor Group on Climate Change (IGCC) has slammed the boards of several ASX-listed companies for their lack of climate action.

The IGCC is a collaboration of Australian and New Zealand institutional investors focused on the impact of climate change on investments.

Board’s of 15 companies such as Qantas Airways Limited (ASX: QAN), Woodside Petroleum Limited (ASX: WPL) and South 32 Ltd (ASX: S32) are said to “lack the skills and experience to lead the corporate transition to net zero emissions by 2050, and it is unclear how they are addressing this gap”, according to the IGCC.

The report, titled “‘A Changing Climate: what investors expect from company directors on climate” studies 15 of Australia’s most carbon intensive companies. It sets out investor expectations regarding climate change risk.

Whilst not price-sensitive, shares in South32 took a hit today and edged lower to finish 1.4% in the red amid the release of IGCC’s analysis.

Here are the details.

What does the IGCC report mean for South32?

The report comes as investors are becoming more and more aware of the role companies are set to play in the climate risk transition.

Even the big guns are joining the cause. A recent push sees some of the world’s top asset managers sign up to the “net zero asset managers initiative” that now has over 220 signatories and $57 trillion in assets under management.

Suffice to say, there is a huge wave of steam gathering behind climate change initiatives from the finance world.

It, therefore, comes as no surprise that several shareholder meetings have advocated board members be removed this year due to their failure in acknowledging climate change risks.

For instance, the IGCC refers to ExxonMobil which “lost two board seats due to growing concern by investors over the risk of failing to adjust its business strategy to address global efforts to combat climate change”.

Not only that, the IGCC submits that these 15 companies don’t see climate change as a material risk, instead viewing it as “a separate risk issue and not integrated into the overall company strategy”.

The group doesn’t name the company in isolation, but calls on companies such as South32 to “ensure investment confidence” by adopting a range of measures that would see its board “reflect the climate change challenges ahead”.

These include ensuring board representatives have expertise in:

• Skills in disruption and transition
• Ability to challenge existing business models
• Knowledge of climate change
• Change management skills

It also advocates for the company and its colleagues to integrate climate change fully into company strategy, including capital allocation decisions and risk management.

The IGCC also reckons remuneration should be reflective of the company’s climate change targets, and for companies to put their money with their mouth is when issuing public statements.

With regards to its analysis, IGCC’s director of corporate engagement Laura Hillis stated:

We are at a tipping point for the transition to net zero emissions in Australia as evidenced by recent announcements from the federal government. While promisingly, many of the companies assessed for this report have set net zero targets, it is unclear based on the findings of this report how prepared the boards of these companies are to lead the transition to net zero.

Hillis continued:

Boards that fail to recognise the risk of climate change and their role in driving the company transition to a low carbon business, will leave the company and investors exposed to unacceptable financial, strategic and market risks. Not to mention they will miss out on the opportunities on the decarbonisation pathway, including jobs for regional communities

Investors are sure to keep a close eye on this space as pressure mounts on ASX-listed entities to recognise the risks outlined by the COP26 summit and align with the principles set out there.

South32 share price snapshot

The South32 share price has soared over 58% in the past 12 months, after rallying as much as 42% this year to date.

These returns are ahead of the benchmark S&P/ASX 200 index (ASX: XJO)’s gain of around 17% in that time.

The post South 32 (ASX:S32) share price sinks amid increased climate risk scrutiny appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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