Why this could be one of the best blue chip ASX shares to buy right ...
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There are a good number of blue chip ASX shares to choose from on the Australian share market.
But one that could be a standout pick for investors right now is listed below.
Let's see why it is a best idea according to the team at Morgans.
Which blue chip ASX share is a strong buy?The ASX blue chip share in question is Penfolds, Wolf Blass, and 19 Crimes owner Treasury Wine Estates Ltd (ASX: TWE).
Morgans believes it could be a strong buy at current levels. Particularly if its recent blockbuster acquisition of DAOU Vineyards delivers the goods for the wine giant.
In addition, with Chinese tariffs on Australian wine imports looking likely to be lifted in the near term, the broker is very positive on Treasury Wine's outlook. The broker commented:
It may take some time for the market to digest TWE's acquisition of Paso Robles luxury wine business, DAOU Vineyards (DAOU) for US$900m (A$1.4bn) given it required a large capital raising. The acquisition is in line with TWE's premiumisation and growth strategy and will strengthen a key gap in Treasury Americas (TA) portfolio. Importantly, DAOU has generated solid earnings growth and is a high margin business. It consequently allowed TWE to upgrade its margins targets. While not without risk given the size of this transaction, if TWE delivers on its investment case, there is material upside to our valuation. The key near-term share price catalyst is if China removes the tariffs on Australian wine imports.
Morgans currently has an add rating and $14.03 price target on its shares. This offers 15% potential upside from current levels.
Let's also not forget that Treasury Wine is a dividend payer. Morgans expects partially franked dividends per share of 36.4 cents in FY 2024 and then approximately 45 cents in FY 2025.
Based on its current share price of $12.20, this will mean dividend yields of 3% and 3.7%, respectively, for investors.
Overall, if Morgans' recommendation proves accurate, it would mean a very attractive total return of approximately 18%.
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