If you’re looking to add a few ASX 200 blue chip shares to your portfolio in June, then the three listed below could be worth considering.

I believe these blue chip shares have the potential to generate solid returns for investors over the next few years. Here’s why I would buy them:

Commonwealth Bank of Australia (ASX: CBA)

The first blue chip share to consider buying is Commonwealth Bank. I think it would be a great option for investors that don’t already have exposure to the banking sector. This is because I believe it is the highest quality bank in Australia and well-positioned for growth once the headwinds it is facing ease. And with its shares offering an estimated fully franked yield of at least 5% in FY 2021, it is also a handy source of income in this low interest rate environment.

Goodman Group (ASX: GMG)

Another ASX blue chip share to consider buying is Goodman Group. It is an integrated commercial and industrial property group with a high quality portfolio of assets. I’m a big fan of Goodman because its properties are exposed to industries benefiting from structural tailwinds like ecommerce. Given how these assets are likely to be in demand for many years to come, I believe it is well-positioned for solid long term growth.

SEEK Limited (ASX: SEK)

A final ASX blue chip share to consider buying is SEEK. While times are hard now, I think the job listings giant could still be a market beater over the next decade. This is due to the quality of its ANZ business and its growing China-based Zhaopin business. The latter contributed 47.8% of total revenue during the first half of FY 2020. This compares to the ANZ business, which accounts for 25.6% of its revenue. Given how lucrative the China market is, I’m confident Zhaopin can drive strong growth for SEEK for many years to come.

More reading

• ASX 200 drops 3%, Webjet share price sinks
• Fundie sees trouble ahead for ASX bank dividends
• ASX bank share prices tumble as they aren’t out of the COVID-19 woods yet
• What is the ASX impact of a fall in house prices?
• 3 ASX shares to buy now with $10,000

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The MGM Wireless Limited (ASX: MWR) share price had a gloomy day on the market on Thursday after shares resumed trading for the first time since late May.

MGM Wireless is a micro-cap ASX tech share that designs and develops technology, software and wearable devices to enhance communication between families, schools, and society.

The company’s multichannel communication solutions enable schools to communicate with parents and caregivers using their preferred medium. These solutions are used by more than 1,400 schools and 1.7 million parents.

What’s going on with MGM Wireless shares?

MGM Wireless requested the voluntary suspension of its shares in late May pending an announcement of a significant new customer contract and capital raising.

The company revealed details of the capital raising last week on 5 June, announcing its intention to raise up to $1.5 million via a share purchase plan (SPP).

The SPP will be priced at 10.75 cents, representing a 23.2% discount to the last trading price of MGM shares on 22 May.

MGM Wireless will use the capital raised from the SPP primarily to accelerate the growth of its Spacetalk business.

Spacetalk is a children’s smartwatch sold in Australia, New Zealand and the UK through leading retailers like Officeworks, JB Hi-Fi Limited (ASX: JBH) and Kogan.com Ltd (ASX: KGN). 

MGM Wireless is aiming to scale-up growth and progress towards potential “company-changing deals” for Spacetalk and new product releases.

With this, the company detailed two new products set to be released this month: a new model watch specifically for seniors and a new model children’s watch.

MGM Wireless believes the revenue growth for its seniors watch could match or exceed the growth it has experienced with Spacetalk. In this way, the seniors watch creates the opportunity to double the rate of the company’s overall revenue growth.

New customer contract update

As we touched on earlier, MGM Wireless requested its shares be suspended pending the announcement of two developments: the capital raising and a “significant new customer contract”.

While the capital raising was announced last week, details of the contract came today, allowing MGM Wireless shares to resume trading.

The company advised that the contract is currently progressing through the final stages of the customer’s authorisation and contract execution process.

However, the requirements of these final stages and COVID-19 logistical issues have reportedly caused the sign-off to take longer than expected.

MGM Wireless noted it will inform the market immediately once it is in a position to make an announcement regarding the outcome of this customer contract.

More reading

• Why the Webjet share price isn’t a bargain buy
• These ASX shares are the best way to invest overseas
• Why is the A2 Milk share price underperforming?
• What today’s ASX 200 selloff tells me
• HRL Holdings share price flies 20% on consensus-beating earnings guidance

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post MGM Wireless share price drops 7% as new contract hits a snag appeared first on Motley Fool Australia.

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Two of the worst performers on the S&P/ASX 200 Index (ASX: XJO) on Thursday were the Flight Centre Travel Group Ltd (ASX: FLT) share price and the Webjet Limited (ASX: WEB) share price.

The shares of the travel booking companies fell 10.5% and 10%, respectively.

Why did Flight Centre and Webjet shares crash lower?

With the market falling heavily today, it appears as though investors have been taking profit.

This isn’t entirely surprising given the stellar gains Flight Centre and Webjet shares have made over the last seven weeks.

Prior to today, the Webjet share price was up over 100% since April 22, whereas the Flight Centre share price was up 64% over the same period.

This has been driven by Australia’s quicker than expected recovery from the pandemic and optimism that the domestic travel market could rebound in the coming months. That is of course if Australia can avoid a second wave as restrictions are eased.

Therefore, news that someone in Melbourne that was protesting at the weekend has been diagnosed with COVID-19 may have also spooked investors today.

Should you buy the dip?

I wouldn’t be a buyer of Flight Centre or Webjet’s shares right now. Although both their shares are down materially from their highs, they still look very expensive to me.

This is particularly the case with Webjet. It currently has a market capitalisation of $1.4 billion. This is based on a total of ~339 million shares outstanding and a share price of $4.18.

Surprisingly, Webjet’s market capitalisation is actually greater than what it was at the start of the year before the pandemic.

At that point Webjet had a total of ~135.6 million shares outstanding and a share price of $9.49. This equates to a market capitalisation of just under $1.3 billion.

So, despite the Webjet share price trading 73% lower than its 52-week high and the next couple of years likely to be very tough, its valuation is actually higher now than in January because of its highly dilutive capital raising.

I believe this demonstrates why it can be dangerous to just use a company’s share price as a guide for whether a share is cheap or not.

More reading

• All Technology Index sees stunning comeback
• How the A2 Milk and Bubs share prices have performed during the pandemic
• Why Flight Centre, Smartgroup, Woodside, & Worley shares are dropping lower
• The smartest ASX shares to invest $10,000 in right now
• ASX 200 jumps 2.4%, unloved shares keep rising

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Webjet share price isn’t a bargain buy appeared first on Motley Fool Australia.

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