With so many quality blue chip shares to choose from on the Australian share market, it can be hard to decide which ones to buy.

To narrow things down I have picked out three blue chip ASX 200 shares which I think are standout buys. Here’s why I like them:

Goodman Group (ASX: GMG)

Goodman Group is an integrated commercial and industrial property group which owns, develops, and manages industrial real estate globally. I think it is positioned perfectly for growth over the long term thanks to some very smart investments over the last decade. These include gaining exposure to the structural tailwinds of the ecommerce market with properties leased to the likes of Amazon and DHL. Based on how quickly online shopping is growing, especially after the pandemic, these assets are likely to be in demand for a long time to come. I expect this to underpin solid earnings and distribution growth throughout the 2020s. I think this makes it a blue chip share to buy.

REA Group Limited (ASX: REA)

Although times have been hard for this property listings company this year because of the pandemic, I’ve been very impressed at the resilience of its business model. Despite a sharp drop in property listings, it was able to reduce costs and grow its profits during the third quarter. The good news is that trading conditions are improving as social distancing restrictions ease and listing volumes appear to be recovering. I expect this to lead to REA Group’s profit growth accelerating in FY 2021 and FY 2022.

Telstra Corporation Ltd (ASX: TLS)

A final blue chip share to look at buying is Telstra. I like the telco giant due to its T22 strategy, which is aiming to turn the company into a leaner and lower cost operation. In addition to this, the return of rational competition in the telco market, the easing of the NBN headwind, and its leadership position in 5G are other reasons to be positive. The latter is expected to be a key driver of growth over the next few years and could help underpin modest profit and dividend growth from FY 2022 onwards.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended REA 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.

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The Wesfarmers Ltd (ASX: WES) share price is ahead of the S&P/ASX 200 Index (INDEXASX: XJO) year to date, over the past year, and over the past week. In fact, despite lockdowns and bushfires, the Wesfarmers share price is up by 4% year to date. 

Like JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN), Wesfarmers found itself well-positioned for the lockdowns.

The brands boosting the Wesfarmers share

Officeworks’ sales performance, up to the end of May for 2H20, rose by 27.8% against the prior corresponding period. This is a major step up from the 11.5% growth in 1H20. Similarly, Bunnings has seen its sales performance for 2H20 increase, so far, by 19.2% versus the 5.8% rise in 1H20.

This is a significant increase likely due to the company’s customers continuing to spend more time working, learning and relaxing at home. In a performance update on 9 June, the company claimed Bunnings had seen growth across all Australian trading regions and product categories. Pretty impressive.

Wesfarmers secret weapon

There are 2 secret weapons fueling the performance of Wesfarmers shares. First is the online company they purchased last year, Catch. Catch followed in the footsteps of permission marketing pioneer site, Daily Candy. The initial newsletter was ‘Catch of the Day’. Today it has evolved into an online marketplace. 

Catch is not just an e-commerce site to sell products from K-Mart or Bunnings. It is trying to compete directly with Amazon.com, Inc. (NASDAQ: AMZN) or Kogan.com Ltd (ASX: KGN). Moreover, it sells products directly in competition with Kogan.

Catch saw its 2H20 sales performance so far improve by an astounding 68.7% against the previous corresponding period. In contrast, 1H20 reported a gross sales increase of 21.4%. 

Across all their retail operations, Wesfarmers have seen total online sales growth of 89%. 

Strong management

The Wesfarmers management team has made quite a few tough decisions in recent time. They sold down their stake in the Coles Group Ltd (ASX: COL) at a near all-time high share price. In addition, they took the decision to close loss-making Target stores and to refocus on K-Mart and acted swiftly to permanently close 7 small-format Bunnings stores during the half.

Foolish takeaway

Wesfarmers unintentionally holds a range of assets which were perfectly suited to the recent lockdown. It has also bought a company that places it directly in competition with Kogan for growing online sales.

Lastly, Wesfarmers management have shown the capacity to make hard decisions. These include, as mentioned, closing underperforming Bunnings formats, releasing capital from Coles for business growth and closing the door on underperforming Target stores.

More reading

• Where to invest for reliable dividend shares
• Why I would buy Telstra and these ASX 200 blue chip shares
• 5 things to watch on the ASX 200 on Friday
• ASX 200 falls 0.9%, Afterpay share price hits new record
• Is the Cochlear share price in the buy zone now that it’s down 23%?

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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 Wesfarmers share is beating the ASX 200 appeared first on Motley Fool Australia.

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