Warren Buffett’s investment strategy has been hugely successful for many years. His long-term approach and purchase of high-quality companies trading at low prices has allowed him to outperform the stock market.

Following a similar approach could help to build a retirement nest egg over the coming years. With many shares appearing to offer good value for money right now, today could be the right time to start that process – even from a standing start at age 50.

Warren Buffett’s long-term approach

One of the key parts of Warren Buffett’s approach to investing is his long-term outlook. He avoids short-term fads and instead seeks to maximise returns over many years, and even decades. In doing so, he provides his portfolio holdings with the time they need to deliver on their potential. His strategy also allows compounding to have maximum impact on portfolio value.

An investor aged 50 may not have as much time to build a retirement nest egg as someone starting their career. However, they are likely to have 15+ years left of working until they retire. As such, they have a long time horizon and may be able to follow Buffett’s lead in using a buy-and-hold strategy to improve their financial position.

Investing money in high-quality stocks at low prices

Another facet of Warren Buffett’s investment strategy that could be useful to many investors is his focus on buying undervalued shares. This does not mean that he buys cheap shares in low-quality companies, or that he seeks to buy the best stocks at any price. Instead, he combines the two approaches to purchase high-quality stocks when they have low prices.

In many cases, their low prices are caused by weak operating conditions prompted by a tough economic period. History shows that such conditions are unlikely to last in perpetuity, since the economy has always recovered from its challenges to post improving growth rates. As such, buying companies with solid financial positions and wide economic moats while they experience temporary challenges could be a sound move.

Investing for retirement

Using Warren Buffett’s strategy could lead to impressive returns that beat the stock market’s performance over the long run. Even if an investor matches the 8-10% annual total returns of indexes such as the FTSE 100 Index (INDEXFTSE: UKX) and S&P 500 Index (INDEXSP: .INX) over recent decades, they could build a surprisingly large portfolio by retirement.

For example, investing $1,000 per month over 15 years at a 9% return would produce a portfolio valued at $381,000. From this, a 4% annual passive income would amount to more than $15,000 per year. By following Warren Buffett’s strategy it is possible to beat such returns in the coming years to produce a larger nest egg and a more generous income that could even lead to an early retirement.

More reading

• 2 of the best ASX growth shares to buy now
• Here’s how to make a $1 million share portfolio by investing $1,000 a month
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• Is the A2 Milk (ASX:A2M) share price a buy?

Motley Fool contributor Peter Stephens 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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If you’re a growth investor, then you’re in luck. The ASX is home to a number of companies which have the potential to grow strongly over the 2020s.

Two to consider buying are listed below. Here’s why they are highly rated:

Altium Limited (ASX: ALU)

Altium is an electronic design software provider. It is the company behind the Altium Designer (and Altium 365) platform, the NEXUS design collaboration platform, and the Octopart electronic parts search engine. Altium is aiming to dominate the electronic design market and believes its new cloud-based Altium 365 platform is key to achieving this.

This certainly is a lucrative market to dominate. Thanks to the proliferation of electronic devices due to the Internet of Things and artificial intelligence markets, the electronic design market is expected to grow materially over the next decade.

Analysts at Credit Suisse are positive on the company. They have an outperform rating and $35.00 price target on the company’s shares. The Altium share price ended the week at $30.66.

Kogan.com Ltd (ASX: KGN)

This ecommerce company has been a very strong performer over the last 12 months. This is thanks to the acceleration of the shift to online shopping and its strong market position. Positively, this strong form has continued in FY 2021 despite the retail sector opening back up largely as normal.

For example, Kogan recently released its half year update and revealed explosive sales and profit growth. For the six months ended 31 December, Kogan’s gross sales, which include the Mighty Ape business, grew 96% over the prior corresponding period.

Positively, thanks to margin expansion, the company’s gross profit grew over 120% and its earnings before interest, tax, depreciation and amortisation (EBITDA) jumped over 140%.

Credit Suisse is also a fan of Kogan. It currently has an outperform rating and $21.08 price target on its shares. This compares to the latest Kogan share price of $16.76.

More reading

• Why the Kogan (ASX:KGN) share price is charging higher today
• 5 fantastic ASX shares to buy right now
• 2 COVID-19 ASX shares to buy
• 2 outstanding ASX tech shares to buy and hold until 2030
• 3 stellar ASX growth shares to buy today

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 Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Kogan.com ltd. 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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By utilising compound interest and giving it time, it’s mathematically possible to grow a $1 million share portfolio by investing $1,000 a month.

What’s compound interest?

Normal interest is pretty easy to understand. If you have $100 in a bank account with a 2% annual interest rate, you should have $102 after one year. If you started with $1,000 in the bank then you’d finish the year with $1,020 in the account.

The power of compound interest is when the interest starts earning interest. Using the example of starting with $1,000, the extra $20 earnings during year one would earn $0.40 of interest itself in year two. The original $1,000 would also earn another $20 of interest. When you do that process of interest earning interest for many years in a row it can lead to a lot of growth of the original amount of money.

Albert Einstein once supposedly said about compound interest: “Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.”

With a 5% interest rate, a single $100 investment will only make $5 over one year. But if that $100 is given 10 years to grow at a 5% annual interest rate, and the money is re-invested each year, then it grows to become $163 after a decade. It takes less than 15 years for the $100 to double to be worth $200.

But the money can compound into much larger numbers, like a $1 million share portfolio, if the dollar contributions are higher and the return on investment (ROI) is stronger that 2% or 5%.

Share market returns

The share market has often been the best performing asset over the long-term. According to Vanguard, Australian shares have produced returns of 9.6% per annum since 1970. Going back decades prior to that, the average return has been roughly 10% per annum.

Those returns didn’t require finding shares like CSL Limited (ASX: CSL), Fortescue Metals Group Ltd (ASX: FMG) or Xero Limited (ASX: XRO) before their meteoric rises, it’s just achieving the market average.

How to make a $1 million share portfolio by investing $1,000 a month

There are various compound interest calculators out there that can help people play around with different scenarios. Moneysmart has one.

Using the power of the ASX share market average historical returns of 10% per annum, and investing $1,000 per month, it would take less than 23 years for the portfolio to reach the $1 million share portfolio starting at $0. That averages out to be $12,000 a year.

Different households have different income and expenses, so some households may be able to invest more than that,  whereas others may not be able to invest as much.

Don’t forget, most employees receive regular superannuation contributes which may could make up a sizeable proportion of the $12,000 annual target.

Just to give a couple of other examples, if a household could only invest an average of $750 a month then it would take just over 25 years to reach the $1 million share portfolio using 10% as the average return per annum in the calculation. If a household could invest $1,250 a month then it’d take less than 21 years to reach the $1 million goal.

The only other variable that can be changed would be the average return figure of 10% per annum. That’s what the market average has done, but there have been ASX shares that have produced stronger returns than that in recent years and there may be others in the future.

More reading

• Top brokers name 3 ASX shares to buy today
• 2 ASX 200 shares to buy right now
• ASX 200 Weekly Wrap: RBA unleashes ASX’s inner animal
• 2 strong blue chip ASX shares rated as buys by brokers
• 3 compelling ASX shares to buy in February

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of 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 S&P/ASX 200 Index (ASX: XJO) wasn’t able to continue its positive form and tumbled lower last week. The benchmark index fell 0.6% to end the period at 6,806.7 points.

Fortunately, not all shares dropped with the market. Here’s why these were the best performing ASX 200 shares last week:

Zip Co Ltd (ASX: Z1P)

The Zip share price was the best performer on the ASX 200 last week with an impressive 24.8% gain. This stretched the buy now pay later (BNPL) provider’s year to date gain to a whopping 104.7%. Investors were fighting to get hold of the company’s shares amid speculation it is considering a secondary listing in the United States. This would give Zip greater access to US capital markets. In addition to this, a strong second quarter update and an overall re-rating of BNPL shares following the Affirm IPO in the United States has been supporting the Zip share price.

Vocus Group Ltd (ASX: VOC)

The Vocus share price was some way behind as the next best performer with a gain of 12.8% over the five days. Investors were buying the telco’s shares after it confirmed the receipt of a takeover approach. According to the release, the company has received a confidential non-binding, indicative proposal from Macquarie Infrastructure and Real Assets (MIRA) and its managed funds. MIRA has tabled an offer of $5.50 per share, which represented a 25.5% premium to its last close price at the time. Vocus has granted MIRA with due diligence access. However, with the Vocus share price ending the week at $4.94, investors don’t appear overly confident that a deal will be done.

Graincorp Ltd (ASX: GNC)

The GrainCorp share price was on form last week and stormed 12.5% higher. The catalyst for this was the release of a trading update by the grain exporter. According to the release, Graincorp expects to report FY 2021 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $230 million to $270 million. This will be an increase of 113% to 150% from FY 2020’s EBITDA of $108 million. Management advised that it experienced near optimal conditions across much of eastern Australia during the recent winter cropping season. This led to one of the largest crops in recent history.

Insurance Australia Group Ltd (ASX: IAG)

The Insurance Australia Group share price was a positive performer and rose 7.9% over the period. Investors were buying the insurance giant’s shares following the release of a stronger than expected half year result. IAG delivered a 3.8% increase in gross written premiums (GWP) to $6,188 million for the first half. And thanks to lower motor claims, the company reported an impressive 33.1% increase in insurance profit to $667 million. And while it posted a statutory loss after tax of $460 million, this didn’t stop the IAG board from declaring a 7 cents per share interim dividend.

More reading

• These were the worst performing ASX 200 shares last week
• ASX 200 falls, Melbourne lockdown bites, Baby Bunting drops
• Telstra (ASX:TLS) share price rises as brokers pass judgement on its profit result
• ASX 200 down 0.3%: Crown CEO hasn’t resigned, Mirvac update, Nearmap remains halted
• Mirvac (ASX:MGR) share price slides on half-year results

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 ZIPCOLTD FPO. 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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The S&P/ASX 200 Index (ASX: XJO) ran out of steam last week and tumbled lower. The benchmark index dropped 0.6% to end at 6,806.7 points.

While a good number of shares dropped with the market, a few recorded particularly severe declines. Here’s why these were the worst performing ASX 200 shares last week:

CIMIC Group Ltd (ASX: CIM)

The CIMIC share price was the worst performer on the ASX 200 last week with a 20.7% decline. The contractor’s shares crashed lower following the release of its full year results for FY 2020. While CIMIC reported a jump in profits, this growth was driven purely by the sale of a 50% stake in the Thiess business. Excluding this sale, CIMIC’s underlying profit fell 25% year on year. Another cause for concern was the company’s weak cash flows.

AMP Ltd (ASX: AMP)

The AMP share price wasn’t far behind with a disappointing 16.2% decline over the five days. Investors were selling the financial services company’s shares following the release of its full year results.  For the 12 months ended 31 December, AMP reported an underlying net profit after tax of $295 million. This was down a disappointing 33% on the prior corresponding period. Management advised that the result reflects the impacts of COVID-19 on its clients, its business, and the broader economy and financial markets.

Challenger Ltd (ASX: CGF) 

The Challenger share price was out of form last week and dropped 12.9%. The catalyst for this was the release of the annuities company’s half year results. For the first half of FY 2021, Challenger reported a 12% increase in annuity sales to $2.2 billion and a 10% lift in total life sales to $3.4 billion. However, despite the sales growth, normalised net profit after tax was down 10% to $137 million. According to CommSec, the market was expecting a net profit after tax of $182 million.

Bravura Solutions Ltd (ASX: BVS)

The Bravura share price was a poor performer and fell 11.9% over the five days. This was despite there being no news out of the financial technology company. Possibly weighing on its shares was a note out of Goldman Sachs. Although the broker has retained its buy rating on its shares, it has reduced its price target by 6.7% to $4.20. The Bravura share price ended the week at $2.82.

More reading

• ASX 200 falls, Melbourne lockdown bites, Baby Bunting drops
• Telstra (ASX:TLS) share price rises as brokers pass judgement on its profit result
• The Cimic (ASX:CIM) share price is dipping today despite contract win
• ASX 200 down 0.3%: Crown CEO hasn’t resigned, Mirvac update, Nearmap remains halted
• Mirvac (ASX:MGR) share price slides on half-year results

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 Bravura Solutions Ltd. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Bravura Solutions Ltd. 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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Could the A2 Milk Company Ltd (ASX: A2M) share price be a buy right now? It has fallen to a 52-week low of around $10.

What’s going on?

The market continues to punish A2 Milk as it suffers with lower demand for its products.

It’s experiencing issues relating to infant formula demand. In August there was the flow-on effect of pantry de-stocking continuing into FY21 after the strong sales lift in the third quarter of FY21 and lower than anticipated sales to retail daigous in Australia, primarily due to reduced tourism from China and international student numbers.

In September it said that it had started to see additional disruption to the corporate daigou and reseller channel, particularly because of the prolonged stage 4 lockdown in Victoria, with a contraction beyond its expectations.

A2 Milk told the market in December that the effect of the disruption in the daigou channel, which represents a significant proportion of infant nutrition sales in the ANZ business, has proved to be more significant and protracted than was previously anticipated. This is also impacting sales in other segments.

The company had been expecting a stronger recovery in the FY21 second quarter. The recovery has been slower than expected.

A2 Milk is also seeing an impact in the cross border e-commerce channel (CBEC) because of the daigou troubles. The ASX share says that the daigou channel plays an important role in stimulating demand across multiple sales channels, including CBEC.

As a result of all of the above, and the recovery not being as strong as expected, its internal sales forecasts for both the daigou and CBEC channels for the rest of FY21 reduced in December. Its intention is to focus on reactivating the daigou channel in the second half.

Any positives?

A2 Milk revealed that its China mother and baby stores (MBS) growth remains very strong and it expects revenue growth in the first half to be above 40%.

The rolling 12-month rolling market value share in MBS is continuing to rise, it’s now at 2.3% at the end of October, with increases in both same store sales and the number of new stores in the first half.

A2 Milk also said that its liquid milk businesses in Australia and the USA have performed well through the first half, with both milk businesses posting “strong” growth compared to the first half of FY20.

Despite the problems with the daigou channel, A2 Milk said that it’s seeing a positive trend in indicators in China like awareness and intention to purchase. A2 Milk continues to see a positive impact from the marketing investment in activation and brand building activities.

A2 Milk guidance

A2 Milk is expecting FY21 first half revenue to be around NZ$670 million, with FY21 annual revenue in the range of NZ$1.4 billion to NZ$1.55 billion. The FY21 earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be between 26% to 29%.

Is the A2 Milk share price a buy?

There are mixed views about A2 Milk.

Broker Citi thinks that A2 Milk shares are a sell because of continuing troubles in the daigou sector, stronger domestic brands and the uncertainty relating to market access. It has a share price target of $9.40 for the infant formula business.

However, Morgans has a buy rating at the moment with a share price target of $12.20. The broker acknowledged that trading was weaker than expected and it will be some time before investors are confident about the business again.

More reading

• Leading brokers name 3 ASX shares to sell today
• What to expect from the a2 Milk (ASX:A2M) half year result
• 2 exciting mid-cap ASX shares to buy and hold
• 2 ASX shares rated as buys by brokers
• Here are the 10 most shorted shares on the ASX

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is the A2 Milk (ASX:A2M) share price a buy? appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) fell by 0.6% today to 6,807 points.

Here are some of the highlights from the ASX today:

Victoria goes into lockdown

From midnight tonight, the whole of Victoria will enter a 5-day lockdown to act as a “circuit breaker” against the spread of the UK strain of COVID-19 which saw the total number of cases reach 13.

Victoria will go back to stage 4 restrictions which will see people only be able to leave for four reasons: essential work, exercise, care and caregiving and shopping for essential supplies. The exercise and shopping will be only for a 5km distance from home. Masks will need to be worn everywhere except in your own home, with no visitors.

Baby Bunting Group Ltd (ASX: BBN)

The baby and infant product retailer released its FY21 half-year result today.

It reported that total sales increased by 16.6% to $217.3 million against the 26-week prior corresponding period. Same store sales growth was 15%, or 21.8% excluding Victorian stores.

Total online sales growth was 95.9%, with click and collect sales growth of 218%.

Baby Bunting’s gross profit margin went up 41 basis points to 37.4%. Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 29.7% to $18.5 million. Pro forma net profit after tax (NPAT) grew 43.5% to $10.8 million, with statutory NPAT growing 54.7% to $7.5 million.

The company decided to declare a fully franked interim dividend of 5.8 cents per share, up from 4.1 cents per share.

Comparable store sales growth in the first six weeks of the second half of FY21 was “strong” at 18.5%, bringing year to date growth to 15.7%.

Baby Bunting managing director Matt Spencer said: “Maternity and baby goods are essential products for parents and parents-to-be and are less discretionary in nature. Our strong comparable store and total sales growth performance demonstrates that we continue to deliver on our strategy of growing market share.

“We still have over 90% of sales occurring or being completed in our stores highlighting the importance of our store network across Australia.”

The company also announced that it plans to launch a physical retail store network in New Zealand.

The Baby Bunting share price fell 6.6% today in response.  

Crown Resorts Ltd (ASX: CWN)

Crown continued to be in the news today after director and chairman Andrew Demetriou resigned from his positions.

However, the casino business denied that CEO and managing director Ken Barton had resigned. The company said that Crown and Mr Barton are continuing to consider his position.

The operating conditions for Crown Melbourne has been halted because of the Melbourne lockdown.

All gaming activities will cease from midnight tonight, as will food and beverage, retail, banqueting and conference facilities other than for the provision of takeaway meals or meal delivery services. Hotel accommodation can continue to be provided in a reduced capacity.

The Crown share price fell by 1.6% in response.

More reading

• Telstra (ASX:TLS) share price rises as brokers pass judgement on its profit result
• Why AVITA, Baby Bunting, Kathmandu, & Webjet shares are sinking
• ASX 200 down 0.3%: Crown CEO hasn’t resigned, Mirvac update, Nearmap remains halted
• Mirvac (ASX:MGR) share price slides on half-year results
• Why the Baby Bunting (ASX:BBN) share price is tumbling 10% lower

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts 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 Ioupay Ltd (ASX: IOU) share price smashed nearly 52% higher to a new 52-week high today. By market close, the Ioupay share price finished the day at 44 cents.

This follows a 30% leap in Ioupay shares on Tuesday, after the Malaysia-based buy now, pay later (BNPL) provider announced it had entered a merchant referral agreement with EasyStore Commerce. EasyStore currently services more than 7,000 merchants across Southeast Asia.

With no new announcements issued today, let’s take a peek at the company’s most recent results.

Ioupay share price soars following quarterly update

Since the release of the company’s December 2020 quarterly report on 29 January 2021, the Ioupay share price has rocketed by around 160%.

A major achievement during the December quarter related to the company obtaining a Malaysian money lending license. This license is required in order to provide BNPL services in Malaysia.

Ioupay also entered into a number of service agreements and improved its system integrations during the period. These activities were carried out in preparation for Ioupay’s BNPL soft launch, which is scheduled to occur during February and March this year.

In its December update, the business also referenced its successful capital raise executed in November 2020. Ioupay raised approximately $10.5 million from sophisticated investors, with around $10 million raised via a two-tranche placement.

The company advised that it plans to use these funds primarily for business expansion activities. This includes funding toward marketing development and salaries for the group’s growing front and back-office teams.

Ioupay outlook

The business believes that market conditions for increased digital commerce in Southeast Asia will remain strong. This outlook is based on the continuing trends of increased online purchases and cashless payments. 

Ioupay expects that the coronavirus environment will accelerate demand-driven growth because of the restrictions that presently impact daily activities and extend across all industries.

The Ioupay share price has risen by a whopping 4,789% over the past year, giving the company a current market capitalisation of $128 million.

More reading

• Here’s why the IOUpay (ASX:IOU) share price is rocketing 30% higher
• Why the IOUpay (ASX:IOU) share price jumped 11% higher today

Motley Fool contributor Gretchen Kennedy 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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If JPMorgan’s analysts are right, the world is looking at a rare new supercycle in commodity prices. Prices have been on the rise for oil, metals and agriculture. And sustained high prices could last for years.

Over the past 100 years, there have been only 4 commodity supercycles. The last one started in 1996 and began to retreat during the fallout from the GFC in 2008.

Much of the credit for driving the last commodities supercycle went to a rapidly expanding, resource-hungry China at the time. But not this one.

As Bloomberg reports:

JP Morgan attributed the latest cycle to several drivers including a post-pandemic recovery, “ultra-loose” monetary and fiscal policies, a weak US dollar, stronger inflation and more aggressive environmental policies around the world.

According to the JPMorgan analysts, led by Marko Kolanovic, the world’s efforts to limit climate change could have “unintended consequences”. Consequences that could “constrain oil supplies while boosting demand for metals needed to build renewable energy infrastructure, batteries and electric vehicles”.

One of the metals you’ll find used extensively in electric vehicles and home storage batteries is copper. Copper is also widely used in electrical wiring for building construction, as well as plumbing. And with developed nations around the globe pledging big infrastructure spending, the metal could see further lifts in demand.

Two leading ASX copper shares

On 23 March last year, copper prices fell to US$210 per pound, victim to the wider COVID-driven panic selling at the time, and the lowest prices since October 2016.

Since then, copper prices have leapt 80%, currently trading at US$377 per pound. That’s right at an 8-year high.

While not every ASX listed copper share has ridden the wave higher, several have. Those include OZ Minerals Limited (ASX: OZL) and Aeris Resources Ltd (ASX: AIS).

The OZ Minerals’ share price is up 221% since copper prices bottomed on 23 March. Over that same period, the Aeris Resources share price gained 350%.

Year-to-date OZ Minerals shares are flat while Aeris Resources shares are down 18%.

Now there are no guarantees ASX copper miners will see their share prices go up, even if we’re in the early stages of commodities supercycle that will continue to lift copper prices in the years ahead.

But without a doubt, ASX copper shares will welcome higher copper prices.

More reading

• Why ASX miners will get a double tailwind from Biden’s US$1.9tn stimulus
• Why these market experts aren’t concerned about the ASX 200’s pullback
• Why the IGO (ASX:IGO) share price is tanking today
• Investment specialist: ASX to buckle in for the commodity bull market of a lifetime
• Why the Oz Minerals (ASX:OZL) share price will be on watch today

Motley Fool contributor Bernd Struben 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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Are you wanting to buy some blue chip ASX shares for your portfolio? If you are, then I would suggest you check out the ones listed below.

These quality companies could have the potential to grow strongly over the next decade. As a result of this, they have been tipped as blue chips to buy. Here’s why:

REA Group Limited (ASX: REA)

The first ASX blue chip share to look at is property listings company REA Group. Over the last few years it has had to contend with a mini housing market crash and a pandemic. But despite this, the company has shown how resilient its business model is by coming out on top and delivering solid financial results.

The good news is that the housing market is improving, mortgage loan growth is accelerating, and house prices have been tipped to rise strongly in 2021. This is likely to lead to higher listing volumes over the next 12 months and could result in an acceleration in its profit growth. Especially given its new revenue streams, cost cutting, and potential price increases.

This morning Morgan Stanley retained its overweight rating and lifted its price target on the company’s shares to $175.00.

ResMed Inc. (ASX: RMD)

Another blue chip to consider is ResMed. It is a medical device company with a focus on sleep disorders.

Despite the pandemic’s negative impact on sleep disorder diagnoses and referrals, ResMed has continued to grow strongly over the last 12 months. This has continued in FY 2021, with ResMed recently releasing a strong second quarter update.

For the three months ended 31 December, the company delivered a 9% increase in quarterly revenue to US$800 million and a 17% increase in net profit to US$206.4 million.

Pleasingly, it still has a long runway for growth ahead of it. In fact, management has set itself a goal of improving 250 million lives in out-of-hospital healthcare in 2025. Helping it achieve this goal will be its rapidly growing digital health ecosystem, which reached over 12 million cloud connectable medical devices in 2020. This provides ResMed with strong recurring revenues and a material amount of high quality data.

Analysts at Morgans are positive on its future. They currently have an add rating and $30.99 price target on its shares.

More reading

• Brokers name 3 ASX shares to buy right now
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited and ResMed Inc. 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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