Investors interested in making stock market investment seeking growth and stability often add blue chip stocks to their portfolio. The approach to ensure reasonable long term growth for wealth creation in stock market is through stocks like
Woodside Energy Group Limited (ASX: WDS)
Woodside Energy Group Limited on half-yearly basis reported production growth year on year with increment in production cost. However, production cost between H1 2023 reduced from $8.8 boe from H1 2023 to $8.3 boe. Group reported EBITDA of $4.4 billion, driven by strong operational performance and gain on sell-down of interest in Scarborough Joint Venture.
On an average company has managed to maintain cash margin of 80% between H1 2020 to H1 2024. Liquidity of $8.5 billion and gearing of 13%, at the lower end of the target range supports capital investment and returns.
Woodside has already begun oil production from its highly anticipated Sangomar Oil Project in June 2024. It is advancing its strategy for production expansion across its operational portfolio, where this new initiative is expected to play a crucial role. The company is actively evaluating additional organic resource growth opportunities and is continuously reviewing its portfolio with the aim of achieving further increases in oil production in the future. Concurrently, the Scarborough and Pluto Train 2 project are also 62% complete, with plans to deliver the first LNG cargo by 2026. Additionally, the Trion project is making significant strides, with the first oil production anticipated in 2028. Woodside's overall exploration efforts also remain vigorous, focusing on the discovery of new projects within its pipeline to support long-term growth.
Woodside's solid operational foundation, coupled with its historical financial growth, has resulted in a threefold increase in revenue and nearly a fivefold rise in earnings over the past five years. This strong performance has strategically positioned the company to provide substantial financial returns to its shareholders.
Aurizon Holdings Limited (ASX: AZJ)
For the year ended on 30 June 2024, Aurizon Holdings Limited reported impressive financial results, showcasing strong growth across multiple key metrics.
The company achieved a 9% increase in revenue, rising to $3,844 million from $3,511 million in FY23. This growth was supported by a 14% rise in EBITDA, which reached $1,624 million, compared to $1,428 million in the previous year. The company's EBIT also showed robust performance, increasing by 20% to $917 million. Net profit after tax (NPAT) grew by 11%, totalling $406 million.
Significantly, free cash flow (FCF) saw a remarkable 123% increase, reaching $661 million, which indicates improved cash generation capabilities. Earnings per share (EPS) rose to 22.1 cents, marking an 11% increase from FY23, while return on invested capital (ROIC) improved by 1.4 percentage points, reaching 8.9%.
Looking ahead, Aurizon aims to secure a 25-30% share of the estimated addressable bulk EBITDA market, valued at around $1.7 billion by FY2030. The company is also focused on developing a nationally significant containerized freight supply chain, targeting over 500,000 TEU in annual volumes by FY2030. Aurizon backed by solid FCF and cash flow from operations is well poised to respond to changing market dynamics while fostering sustainable growth.
AGL Energy Limited (ASX: AGL)
AGL Energy Limited (AGL) has announced a binding agreement to acquire 100% of the shares and units in Firm Power and Terrain Solar for approximately $250 million. This acquisition aligns with AGL's strategic commitment to expand and accelerate its development pipeline, which currently stands at 6.2 GW. The acquisition will strengthen AGL's role in the energy transition by focusing on projects with the greatest long-term value.
In FY24, AGL Energy Limited showcased a robust financial performance with underlying EBITDA rising 63% to $2,216 million and underlying profit after tax surging 189% to $812 million. The company also achieved a substantial statutory profit after tax of $711 million.
Over the past five years, the company has shown strong financial recovery and growth, making it an appealing investment opportunity. Revenue increased to AUD 13,583 million in FY 2024, up from AUD 12,160 million in FY 2020, reflecting consistent operational strength. Gross profit margins improved significantly to 23.9% in FY 2024, up from 15.4% in FY 2022, demonstrating effective cost management and operational efficiency.
AGL possesses a diverse array of operational energy projects and maintains a substantial pipeline of future initiatives, encompassing both conventional and an increasing share of renewable energy ventures. These elements underscore a robust and stable growth framework for the organization, characterized by scope for consistent revenue increases and the potential for advancements through enhanced customer loyalty and an improved market standing. Additionally, the company's stable operational costs and effective capital management contribute to the preservation of profit margins in the forthcoming years, facilitating steady earnings growth. The long-term efficiencies also indicate a promising potential for earnings enhancement over the next decade.
Source: Company’s Report
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