Do these five Blue-chip stocks represent bargain buy opportunities?

CSL Ltd

CSL Details
Strong NPAT growth: CSL Ltd (ASX: CSL) reported for a net profit after tax (NPAT) of $806 million for the six months ended December 31, 2016. This witnessed a growth of $87 million or 12% on a reported basis against the prior comparable period (PCP). The underlying NPAT grew 36% and earnings per share (EPS) increased 39% on a constant currency (CC) basis (excluding the one-off items related to the Novartis influenza vaccines business acquisition). Reported earnings per share (EPS) rose up 14% and Interim dividend jumped to $0.64 per share. Based on the first half fiscal 2017 profit and expected performance for the second half of fiscal 2017, CSL has outlined NPAT growth for FY17 in the range of about 18% to 20% at constant currency over the FY16 result. The group along with an international team of scientists came up with a successfully prevention methodology for the progression of Diabetic Kidney Disease (DKD) in laboratory studies of type 2 diabetes (findings published in Cell Metabolism). The stock has risen 18.3% in last six months (as at April 04, 2017) and is trading near its full value. We believe the stock is “Expensive” at the current price of $ 126.40


CSL Daily Chart (Source: Thomson Reuters) 

Woodside Petroleum Ltd

WPL Details
Focussing on LNG driven opportunity: Woodside Petroleum Ltd (ASX: WPL) has highlighted that the next wave of demand growth is expected to be arising from the use of LNG as a transport fuel, in ships and on road and rail. This is at the back of the rise in LNG demand and contribution from emerging markets now accounting for 5% of global LNG demand and the same is expected to reach to 27% by 2025. The group is now switching to LNG-fuelling of its supply vessels and aims to invest in infrastructure to provide LNG as a fuel to other industries and exporters. On the other hand, the group does not see the current conditions to be favourable for major investment in greenfield developments. In FY16, the group reported for a production rise by 2.7 MMboe compared to 2015 with record LNG production and record sales volumes. The unit production costs witnessed a 28% reduction. WPL’s Annual General Meeting will be held on May 05, 2017. We give a “Buy” recommendation at the current price of $ 32.78


WPL Daily Chart (Source: Thomson Reuters)

Woolworths Ltd

WOW Details
Improved balance sheet: In the first half of 2017, Woolworths Ltd (ASX: WOW) reported for total group sales of $32.3 bn while EBIT from continuing operations fell 14.5% in comparison to HY16. However, WOW remains committed to solid investment grade credit rating. The group has net repayable debt of $1.5bn which has dropped significantly from HY16 and FY16. WOW maintained its half-year dividend of 34 cents per share with the HY payout ratio of 60% of group NPAT Portfolio businesses. The proceeds from group’s partnership with BP in relation to sale of fuel business, of $1.785m is also expected to boost the balance sheet position. The stock has risen 14.8% in last six months, as at April 04, 2017, and we give a “Buy” recommendation on the stock at the current price of $ 26.77


WOW Daily Chart (Source: Thomson Reuters) 

Wesfarmers Ltd

WES Details
Improvement in operating cash flows: Wesfarmers Ltd (ASX: WES) had declared half year 2017 net profit after tax (NPAT) of $1,577 million reflecting an increase of 13.2% on the prior corresponding period. The group delivered record strong earnings growth for the half with earnings per share rising 12.8% to $1.40 per share, and return on equity moving up 20 basis points to 10.2%. There was an increase of 13.2% in the interim dividend to $1.03 per share. Operating cash flows was reported to increase by $244 million to $2,648 million, with the cash realisation ratio improving to 119.7 per cent.

Financial Performance for half year (Source: Company Reports)
 
Bunnings Australia and New Zealand (BANZ), Kmart and Officeworks boosted the total retail earnings to be in line with the prior corresponding period. Earnings for the Industrials division were above the prior corresponding period as higher coal prices and strong production in the second quarter supported Resources. Wesfarmers’ 2017 third quarter retail sales results are to be announced on April 27, 2017. The stock is already trading at higher levels and also expects challenges owing to margin pressures to persist given the competitive market. We give an “Expensive” recommendation on the stock at the current price of $ 44.26


WES Daily Chart (Source: Thomson Reuters) 

Stockland Corporation Ltd

SGP Details
Growth in Funds from Operations (FFO): Stockland Corporation Ltd.’s (ASX: SGP) stock has risen 3.09% in last three months as at April 04, 2017. As at December 31, 2016, SGP’s retail portfolio included 40 retail centres with Stockland’s ownership interests valued at $7.0 billion while the logistics & business Parks’ portfolio included 27 properties having 1.3 million square metres of building area with Stockland’s ownership interests valued at $2.0 billion and the Office portfolio comprised eight properties with Stockland’s ownership interests valued at $0.7 billion. In 1H 2017, the group reported growth in FFO across all business units. For retirement living, the group delivered improvement in operating profit. The group had also reported for strong presales for Residential.
 

Demand Drivers (Source: Company Reports)
 
Given the trading scenario and real estate conditions prevailing in Australia, we give a “Hold” recommendation at the current price of $ 4.68


SGP Daily Chart (Source: Thomson Reuters)

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