Buy Coles and this quality blue chip ASX 200 share in July

When you are attempting to build a strong portfolio, having a few blue chips in there can be a good thing.

That’s because blue chips are typically large companies that have been operating for many years. They tend to have stable cash flows, strong business models, and experienced management teams.

Combined, this can make them lower risk options and a good foundation to build a portfolio around.

But which blue chip ASX 200 shares could be buy this month? Here are two that are rated as buys:

Coles Group Ltd (ASX: COL)

Analysts at Morgans think that this supermarket giant could be a blue chip ASX 200 share to buy this month.

In fact, the broker has named the company as one of its best ideas again this month. It believes that share price weakness caused by regulatory concerns has created a buying opportunity for investors. It said:

In our view, the ongoing scrutiny on the supermarkets has affected short term sentiment in the sector, which we believe creates a good buying opportunity in COL. While Liquor sales remain soft, we expect the core Supermarkets division (~92% of earnings) to continue to be supported by further improvement in product availability, reduction in total loss, greater in-home consumption due to cost-of-living pressures, and population growth.

Morgans has an add rating and $18.95 price target on its shares.

Qantas Airways Limited (ASX: QAN)

Goldman Sachs thinks that this airline operator could be undervalued and a blue chip ASX 200 share to buy this month.

The broker notes that the company’s valuation is still lower than pre-COVID times. This is despite having structurally and sustainably stronger earnings.

In addition, its analysts point out that the Fly Kangaroo’s shares are trading at a discount to what investors are paying to own US airlines on Wall Street. The broker explains:

QAN is trading 4% below pre-COVID market capitalization with the enterprise value still 7% lower despite a structurally improved earnings capacity. Relative to regional/ US peers (median PE of 9.1x), QAN is trading on a 29% discount at 6.4x FY25 PE. This is more than 2x below the historical 5Y average discount of 14%. We expect this gap to narrow as QAN delivers earnings that are sustainably above pre-COVID levels and demonstrates ability/ willingness to distribute capital to shareholders while renewing the fleet.

Goldman has a conviction buy rating and $8.05 price target on its shares.

The post Buy Coles and this quality blue chip ASX 200 share in July appeared first on The Motley Fool Australia.

More reading

• Buy Coles and these ASX 200 dividend stocks in July
• Top brokers name 3 ASX shares to buy today
• 2 outstanding blue chip ASX 200 stocks to buy for FY25
• Why did ASIC take a look when Qantas shares fell last year?
• Here’s the earnings forecast through to 2028 for Coles shares

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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.