3 ‘Triple Threat’ Blue Chips to Snap Up

by Jeff Reeves | February 29, 2012 11:58 am

March is upon us, and that means the most exciting part of the sports year to many: college basketball’s Final Four tournament.

One of the clearest lessons illustrated by championship teams is that you can’t be a one-trick pony. Defense is crucial, but it’s hard to win titles without scoring. Raining down 3-pointers is great, but rebounding can be just as vital. And then there’s the importance of depth and teamwork to ensure that you don’t live and die on the performance of one superstar.

Those same guidelines are useful to investors. In this challenging market, it’s important to build a balanced portfolio that both protects you from downside risks and allows you room to run.

Some investors pick role players for their portfolio — say, a hot small-cap momentum stock to tap into growth and A-rated bonds for slow and steady returns. But with a little scouting, you can find some superstar blue chips that have it all.

Here are three such “triple threat” blue chips to consider adding to your investing team that have stability via a great dividend and strong cash horde, momentum based on both short-term and long-term performance, and growth that signals future gains:

Intel

Don’t think Intel (NASDAQ:INTC[1]) is just inside desktop computers. The company has been making a big move into mobile, including a recent announcement that a new European telecom partner will begin offering a smartphone designed and powered by Intel chips[2].

The company admittedly has some catching up to do with compared with companies like ARM Holdings (NASDAQ:ARMH[3]), which designed the chips that now power many sexy consumer gadgets including the Apple (NASDAQ:AAPL[4]) iPhone. But with a roughly 16% share of the entire semiconductor market — the largest in the world, blowing away the 9% held by No. 2 Samsung (PINK:SSNLF[5]) — it’s hardly like Intel is a tech dinosaur.

Here’s the scouting report:

Caterpillar

Financial journalist Dan Burrows[6] recently picked Caterpillar (NYSE:CAT[7]) as one of the 10 best stocks to buy for 2012[8]. His thesis was that the company has more growth ahead, especially if a more stable recovery takes shape in the next several months.

I agree with that upside potential — but I’d add that Caterpillar also has remarkable stability that will serve it well, even if the broader economy does backslide. The growth of Caterpillar is impressive, but its size and balance sheet also make it a fairly attractive defensive play, too. CAT doesn’t just cash in on construction equipment, but also supplies miners in South America and China. This emerging-market growth evens out Caterpillar, so don’t fall into the trap of thinking it’s a cyclical stock that lives and dies with housing.

Here’s the breakdown:

McDonald’s

You probably don’t need to be sold on the defensive nature of McDonald’s (NYSE:MCD[10]). The company has gotten really aggressive with recent dividend increases, and is the 900-pound gorilla of the fast-food industry. McDonald’s isn’t going anywhere.

However, this company continues to crank out great growth, too. Thanks to a push into emerging markets and constant innovation with new menu items — from premium coffees to healthy kids options — McDonald’s revenue and earnings still have some pretty good upside.

Here’s the rundown:

Jeff Reeves[12] is the editor of InvestorPlace.com. Write him at editor@investorplace.com[13], follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.

Endnotes:
  1. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  2. smartphone designed and powered by Intel chips: http://investorplace.com/2012/02/intel-makes-a-bold-smartphone-statement/
  3. ARMH: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARMH
  4. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  5. SSNLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSNLF
  6. Dan Burrows: http://investorplace.com/2012/01/caterpillar-cat-fourth-quarter-earnings-top-stocks-to-buy-2012/
  7. CAT: http://studio-5.financialcontent.com/investplace/quote?Symbol=CAT
  8. 10 best stocks to buy for 2012: http://investorplace.com/best-stocks-for-2012/
  9. S&P dividend payout ratios are at a record low of just 27%: http://investorplace.com/2012/02/7-blue-chips-owe-shareholders-a-dividend-hike/
  10. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  11. top performer in the Dow for 2011: http://investorplace.com/2011/12/best-worst-dow-stocks-201/
  12. Jeff Reeves: http://investorplace.com/2012/02/2012/01/2012/01/2012/01/2012/01/2011/12/alcoa-aa-stock-limited-downside-high-upside-stocks-to-buy-in-2012/2011/12/2011/12/investors-can-learn-from-denver-broncos-tim-tebow/2011/12/gold-prices-new-record-2012-buy-gold/2011/12/2011/12/2011/11/2011/11/2011/11/market-rally-bank-stocks-financial-sector/2011/11/3-dividend-commodity-stocks-vale-scco-si/2011/11/2011/10/optimism-about-europe-debt-resolution-a-risk-to-market-rally/2011/10/2011/10/2011/10/no-bear-market-for-5-funds-etfs-slv-gld-thd-xrt-fdn/2011/10/author/jeff-reeves/
  13. editor@investorplace.com: mailto:editor@investorplace.com

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