The resurgence of coronavirus in Victoria has investors once again taking stock of potential economic impacts of the pandemic. When it comes to investing, and the outlook is particularly uncertain, it can often pay to consider life's necessities. These are the products and services we will always need. Basic human needs for food, shelter, and internet access must continue to be met regardless of the economic climate.
Defensive, blue chip ASX shares often cater to these needs. This makes them resistant to economic downturns. Companies in the consumer staples, healthcare, utilities, and telecoms sectors are somewhat insulated from economic fluctuations. Consumers may switch to cheaper options, but they can't go without them altogether. On that note, let's take a look at 3 dependable, blue chip shares to consider adding to your portfolio for these uncertain times.
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3 blue chip shares to buy during uncertain times
Coles Group Ltd (ASX: COL)
The Coles share price proved resilient during the February/March market crash. This was perhaps not surprising given shelves were stripped bare at the time due to consumers stockpiling. The rush on groceries prompted by lockdowns pushed Coles' group sales up 12.9% in the third quarter giving total revenue of $9.2 billion.
Coles operates 2,500 retail outlets nationally, including 800 supermarkets, 900 liquor stores, and more than 700 fuel and convenience retailers (Coles Express). Supermarket sales increased by 13.1% in the March quarter, giving the division its 50th consecutive quarter of comparable sales growth. Liquor sales were up by 7.2% and Express sales up 4.3%.
Wesfarmers Ltd (ASX: WES)
The Wesfarmers share price has recovered strongly from the market downturn. Wesfarmers is the company behind Bunnings, Kmart, Target, Officeworks and the online superstore Catch. It's also the former parent company of Coles but after a series of selloffs, now only retains 4.9% of the supermarket chain. Both Bunnings and Officeworks recorded significant sales growth in the second half to early June. Bunnings sales were up 19.2% and Officeworks sales were up 27.8%.
Lockdown restrictions have resulted in vast numbers of Australians spending increased time living and working at home. Consequently, many have sought to improve their surrounds. This has led to a surge in DIY projects and home office upgrades. Whilst Kmart and Target have struggled during the pandemic, recent easing of restrictions have resulted in improving sales momentum from around early June as customer footfall in shopping centres increased.
Woolworths Group Ltd (ASX: WOW)
Woolworths is the larger of the two major supermarket chains, operating 995 supermarkets across Australia. Including its liquor and Big W brands, Woolworths is behind some 3,000 stores across the country. The Woolworths share price has also proven fairly resilient, but has not recovered as strongly as the Coles share price since the March bear market.
Woolworths reported a 10.7% increase in total, third quarter sales. The Australian food business saw growth of 11.3%, Big W increased sales by 9.5%, and liquor sales rose 9.5%. The hotels business saw a 12.9% drop in sales due to the closure of venues. Sales growth continued in April although moderated from rates seen in March.
Foolish takeaway
Whilst these ASX blue chip shares might not deliver the heady, short-term returns offered by the likes of Afterpay Ltd (ASX: APT), given we are facing such an uncertain economic outlook, I feel they represent solid, defensive additions to a diversified portfolio.
