ASX blue-chip shares can be compelling buys because of the strong market positions that they hold in their industry and their ability to grow earnings.
We don't need to own Commonwealth Bank of Australia (ASX: CBA) shares or BHP Group Ltd (ASX: BHP) shares to own a leader on the ASX. There are a number of other businesses that can provide both resilience and growth.
I'm going to talk about three of the ones I rate as buys below that I'd happily put $1,000 into.
Rio Tinto is one of the world's biggest miners, with a significant presence in iron ore and copper.
The Rio Tinto share price has dropped 10% since 30 September 2024, and things could get even better if the miner benefits from China's recent announcement to boost its economy following the US tariffs.
Commodity prices are often heavily influenced by customer demand, with China being a key buyer. According to reports from various media outlets, including CNBC, China is going to cut its seven-day reverse purchase rate by 10 basis points to 1.4%, down from 1.5%.
China's central bank will also lower the reserve requirement ratio by 50 basis points (0.50%), which determines the amount of cash that banks must hold in reserve.
I think this could lead to a better outlook for commodity prices and, therefore, Rio Tinto shares.
Sonic Healthcare is one of the leading pathology businesses in the Western world. It has operations in places like Australia, the UK, the USA, Germany, Switzerland, and New Zealand.
The business has defensive earnings. People don't choose when to get sick or when they'll need pathology services.
The company has grown its earnings both organically and through acquisitions. It has put a lot of capital to work in Europe with a few acquisitions in recent years, boosting both its presence and giving it scale advantages.
Pleasingly, Sonic has grown its dividend in most years of the last 30, without any cuts.
I think tailwinds such as a growing population, an ageing population, and improving technology could help the ASX blue-chip stock's earnings in the longer term.
APA is a major energy infrastructure business with a large portfolio of assets. It owns gas pipelines, storage facilities, processing facilities, gas energy generation, electricity transmission, wind farms, and solar farms.
Energy is an essential part of the Australian economy, and APA is an important player in the space.
APA continues to invest in new pipelines and other assets, unlocking more cash flow for the business and increasing the underlying value of the business.
Impressively, APA has grown its distribution every year for the past twenty years, so it's a pleasing option for stable passive income. The ASX blue-chip share has a sizeable amount of debt on its balance sheet, so any further interest rate cuts would be helpful for both its earnings and its underlying value.
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