3 Big Blue-Chip Stocks to Avoid

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I often hear investor and advisers claiming that you cannot go wrong with the big U.S. blue-chip stocks. After all, these huge corporations make the stuff we all use every day and are unlikely to go out of business.

blue-chip stocks

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While that reasoning may be sound in the very long run, I find that investors, who own blue-chip stocks that are not performing well at a certain period of time, tend to panic out of the blue-chip stocks just as easily as they do more speculative stocks.

A more accurate notion might be that you can never go wrong buying U.S. blue-chip stocks when their fundamentals are on the upswing and ranked at least at “buy” on Portfolio Grader. Here are three U.S. blue-chip stocks to avoid:

IBM (IBM)

IBMIBM (IBM) is a prime example of a blue chip stock to avoid.  While IBM is the bluest of blue chips, the truth is that business is just not very good for IBM right now. Sales over the last five years are actually negative, and IBM has used stock buybacks and plain old financial engineering to show positive earnings growth of 10% annually over that time period.

The near future doesn’t look much brighter for IBM as analyst expect growth term rates to be in the single digits form the next five years. IBM stock has been a “sell” for most of the past year and has delivered a negative rate of return for investors over that time.

IBM stock is currently still ranked a “sell” by Portfolio Grader and should be avoided.

General Electric (GE)

General-Electric-GE-stock-blue-chip stocksGeneral Electric (GE) is another of the great American companies. GE products touch the lives of just about everyone in the country at some point during the day, but business has been flat at GE for the past several years.

The U.S. economy is getting better, but the rest of the world is not improving at the same pace, which is a huge drag on General Electric’s growth in many of its business lines. Like IBM, GE stock has been ranked “sell” for a good part of the past year, and so far, in 2014, investors would have had a small loss form holding GE stock.

GE stock is currently still ranked “sell” by Portfolio Grader. GE stock should be avoided until business conditions improve and are reflected in its ranking.

Chevron (CVX)

dividend stocks chevron cvx stock blue chip stocksChevron (CVX) is one of the largest integrated oil and gas companies in the world, but that doesn’t mean the CVX stock is a “buy.”

Like many of the major oil stocks, Chevron is often thought of as great growth and income stock, but right now, Chevron’s fundamentals just do not justify buying CVX stock. Looking ahead the recent tumble in oil prices could lead to even slower sales and earnings for Chevron, and it needs to be avoided until conditions improve.

CVX stock has been ranked “sell” all year and is down, so far, in 2014. Chevron is still a “sell” according to Portfolio Grader, and investors should avoid the temptation to bottom-fish Chevron stock until the fundamentals improve.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2014/11/blue-chip-stocks-chevron-ge-ibm-general-electric-cvx/.

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