The S&P/ASX 200 Index (ASX: XJO) is home to a large number of quality blue chip shares for investors to choose from.

In fact, there are so many it can be hard to decide which ones to buy.

To narrow things down for you, I’ve picked out three blue chip shares which I think are in the buy zone right now. They are as follows:

Coles Group Ltd (ASX: COL)

I think Coles is a great blue chip option for those searching for a combination of value, growth, and income. At present I feel the supermarket giant’s shares are trading on an attractive valuation in comparison to its peers. Especially given its solid growth potential thanks to its focus on automation, cost cutting, and expansion opportunities. In respect to automation, this focus is expected to lead to margin improvements over the long term. I feel this bodes well for Coles’ dividend growth over the next decade.

Goodman Group (ASX: GMG)

Another blue chip to consider buying is Goodman Group. It is an integrated commercial and industrial property group which owns, develops and manages industrial real estate in 17 countries. Goodman Group has made some very smart investments over the last decade, which I feel positions it perfectly for long term growth. These include gaining exposure to the structural tailwinds of the ecommerce market. Given how quickly online shopping is growing, these assets are likely to be in demand for a long time to come and should underpin solid earnings and distribution growth throughout the 2020s.

REA Group Limited (ASX: REA)

Another blue chip share to consider buying is REA Group. I think the property listings company is a great option due to the resilience of its business model. Even though listings volumes were down during 7% during the third quarter, it didn’t stop REA Group from growing its earnings. The company posted a 1% increase in revenue to $199.8 million and an 8% lift in operating earnings to $119.6 million. And while trading conditions are likely to remain tough in the near term because of the pandemic, I expect its earnings growth to accelerate once the crisis passes. I feel this makes it worth being patient with its shares.

More reading

• Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market
• Is Afterpay an ASX blue chip of tomorrow?
• Brokers name 3 ASX 200 shares to buy right now
• Is Telstra about to be caught in a new mobile phone war?
• ASX 200 down 0.2%: Wesfarmers overhauls Target, Sydney Airport has no plans to raise equity

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended ResMed Inc. 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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I’ve been keeping a close eye on what substantial shareholders have been doing recently.

Substantial shareholders are shareholders that hold 5% or more of a company’s shares. These tend to be large investors, asset managers, and investment funds. These shareholders are obliged to update the market when they make any changes to their holdings.

As a result, I feel investors should look to use these notices to their advantage. After all, they show where the smart money is going.

Two notices that have caught my eye are summarised below:

Altium Limited (ASX: ALU)

According to a notice of initial substantial holder, Pinnacle Investment Management has just become a substantial shareholder of this electronic design software company. The notice reveals that Pinnacle has been adding to its position this month, bringing its total holding to 6,931,951 shares. This equates to a 5.29% stake in Altium. The fund manager was buying shares in or around the level Altium’s shares are trading at now. Which would appear to indicate that it believes they offer plenty of upside from here. I certainly believe this is the case and feel Altium is a top buy and hold option thanks to its exposure to the Internet of Things market.

Atomos Ltd (ASX: AMS)

According to a change of interests of substantial holder notice, Ellerston Capital has taken advantage of a pullback in this video hardware technology company’s share price to top up its position. The notice reveals that Ellerston has bought almost 6 million shares over the last couple of months. This lifted its holding to a total of 22,311,112 shares, which equates to 10.58% of its issued stock. The Atomos share price is down 72% from its 52-week high and at a level which this fund manager appears to believe is attractive. Its shares were hit hard after the pandemic shut down its core pro video market. But with economies slowly reopening around the world, this fund manager may be expecting a rebound in sales and its share price in the near future.

More reading

• Is the Altium share price a buy at $36?
• 3 top ASX growth shares that could smash the market in the 2020s
• 3 shares I’d buy if the coronavirus selloff gets worse
• How to become a millionaire with a $5,000 investment in ASX 200 shares each year
• 5 things to watch on the ASX 200 on Thursday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Atomos Ltd. The Motley Fool Australia owns shares of Altium. 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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Is the Altium Limited (ASX: ALU) share price a buy at $36? I think the electronic PCB software business is a great company.

Altium’s share price has been a strong performer over the past couple of months. Since 23 March 2020 the Altium share price has gone up by 45%. That’s strong gains if you bought at the time, but what about now?

There are plenty of reasons to like Altium:

Growing profit margins – A business can grow its profit faster than revenue if the profit margin can increase as economies of scale keep increasing. These are the types of businesses we want to have in our portfolio. Altium is a great example of this effect (in normal times).

Strong balance sheet – It’s the businesses with a strong balance sheet that are able to cope with the coronavirus situation the best. Altium has no debt and a solid pile that was growing, until recently at least.

Excellent management – I think the management is one of they key reasons the Altium share price has done so well over the past decade. They are long-term focused, set tough but attainable goals and are very considered with capital.

Growing dividend – There aren’t many businesses that offer that attractive combination of fast growth and a growing dividend. Plenty of businesses retain all their profit for further growth. But a dividend is a nice way of getting returns without resorting to selling shares.

So Altium’s share price is a buy today?

I’m confident about Altium’s long-term future. The issue I see is the short-term. Altium has already warned that it’s having to reduce prices to continue to attract new subscribers. That’s the right thing for the long-term – prices can be increased in the future. But it will hurt Altium’s profit in FY20 and maybe even FY21.

We don’t yet know how much profit pain that will entail. It’s true the Altium share price is being helped by the current ultra low interest rates. However, we should be cautious about businesses that are being priced with not much downside. I’d be interested if Altium’s share price was under $30, so I’m going to wait for a better buying opportunity.

More reading

• Fund managers have been buying these ASX shares
• 3 top ASX growth shares that could smash the market in the 2020s
• 3 shares I’d buy if the coronavirus selloff gets worse
• How to become a millionaire with a $5,000 investment in ASX 200 shares each year
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium. 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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