No matter where you look recently, the concept of stocks to buy in any industry looks risky. For years, poor and worsening relations between the U.S. and China have dominated media headlines. That situation does not appear to have an imminent solution. But several other factors are now weighing on domestic markets.
First, the Trump administration threatened tariffs on imported goods on Mexico unless they helped control Central American migration. The two sides reached an agreement, but the underlying relationship is icy. Second, India has hit the U.S. with retaliatory tariffs due to the latter kicking out the former from its preferential-trade program. Finally, an inverting yield curve threatens the markets, including even viable blue-chip stocks.
Again, from all angles, this environment looks like an absolute mess. Invariably, if these headwinds come to roost at once, we would face substantial volatility. Still, I’m confident in the longer-term case for blue-chip stocks to buy. No matter how bad the economy gets, companies must still get business done.
Therefore, I think it pays to pick relevant, “big-ticket” names for your portfolio. Should the worst happen, they’ll likely ride the storm better. If not, even better: a rising tide lifts all boats. With that in mind, here are seven blue-chip stocks to buy now:
Blue-Chip Stocks to Buy: AT&T (T)
Let’s face facts: giant blue-chip stocks to buy are simply not in vogue anymore. Markets now place more emphasis on nimble organizations that can react to business changes. That’s a good quality, particularly if a recession occurs. I still think some wiggle room exists if your name is AT&T (NYSE:T).
Is T stock a perfect play? No. I understand the many criticisms that focus on AT&T’s massive debt load. At just under $164 billion on the latest read, it’s like the gross domestic product of a small nation. I also hear rumblings about its massive and so far disappointing deals, such as DirecTV. Finally, AT&T is hardly what you call a great growth opportunity.
Those are all fair points. But it’s also important to note that almost every business-related innovation of tomorrow will require 5G technology. With geopolitical tensions with our greatest adversaries in China and Russia, leading in 5G is absolutely critical. Like it or not, this simple fact benefits T stock, and I’m willing to roll with the punches.
International Business Machines (IBM)
One of the aforementioned innovations that will benefit from the 5G rollout is the cloud; specifically, the mobile-cloud segment. Prior-generation mobile technologies lacked the connectivity speeds to make mobile-cloud apps anything but rudimentary. But once 5G becomes the new standard in wireless internet, it opens up the door for innovators like International Business Machines (NYSE:IBM).
I concede that among blue-chip stocks to buy, Big Blue doesn’t typically generate excitement. After a strong start to this year, pensive trading has characterized the last few months. Stakeholders of IBM stock are left to wonder if the company’s old version is coming back to bite them.
Certainly, I sympathize with the hesitation. However, I think it’s important to understand that at its core, IBM stock represents viable, big-ticket synergies. IBM is one of the top cloud providers, but it’s more than that. The company leads in multiple high-value technologies, such as deep learning, artificial intelligence, and automation.
What has set back IBM stock in the past is a lack of cohesion in bringing these synergies together. But key acquisitions, such as the recent Red Hat deal, offers a new vision. Essentially, IBM is laying the groundwork for a comprehensive and scalable solution for cloud applications. We’re really talking about IBM 2.0, but the market doesn’t realize it yet. Therefore, this is easily one of the stocks to buy right now.
So much has changed over the past few decades. One huge development I noticed was in the parking lot of my local Target (NYSE:TGT) store. I noticed rows and rows of Tesla (NASDAQ:TSLA) electric vehicles all waiting to park in a designated area. Initial confusion led to a quick realization: they’re waiting their turn to “gas” up.
Given the EV revolution, it’s hard to imagine spending too much investor dollars on oil giants like ConocoPhillips (NYSE:COP). Although COP stock benefits not just from automotive use, demand is demand. Back when EVs were not a thing, oil companies could play fast and loose with their pricing: at the end of the day, we could complain but what good would it do?
Now that consumers have alternatives to fossil-fueled cars, it seems blue chips that are levered to traditional energy markets are going to plummet. However, EVs have their own quirks and inefficiencies that obviously don’t make it to the dealership brochure. Plus, let’s think about what would happen if EV owners had their way.
Imagine if millions of EV owners across America decided to charge up their cars in the dead of summer: we’re talking wide-scale brownouts and blackouts. And are we likely to upgrade our infrastructure to accommodate EVs? That’s why you should still take a look at COP stock.
Southern Co (SO)
Speaking of energy-related blue-chip stocks to buy, concerned investors should take a look at Southern Co (NYSE:SO). Logically, if we do have a comprehensive EV revolution, investments like SO stock could jump far higher than they already have.
I want to point out that I’m not a fossil-fuel snob. Admittedly, it’s a little weird when I see a car silently streak from a standstill to 60 miles per hour. And the cars from the green Formula E racing series sounds like a dog whistle…if I were a dog. But EVs are better for the environment and I get all that jazz.
But folks, energy is energy, which requires conversion of a static element to a kinetic force. That process necessarily impacts the environment, but it’s something that we all put up with to power our digital lifestyles.
For sure, an underlying political factor exists. At some point in the future, fossil-fuel energy may go by the wayside. However, utility firms like Southern Co will very likely be always relevant. They represent an essential cog of our digitalization gear, which is why I like SO stock.
It’s not a perfect comparison, but it’s a good starting point for a discussion. On a year-to-date basis, Toyota Motor (NYSE:TM) — an automotive titan among blue-chip stocks to buy — is up into double-digit territory, albeit slightly. Tesla, however, is staring at a staggering loss of nearly 30%.
Of course, TM stock is winning bigly against TSLA, which is supposed to represent the best of American automotive engineering. I don’t think this is a fluke. While the two companies differ in their choice of catalysts, they still have the same headwinds. For example, millennials don’t really care for car ownership. Second, geopolitical tensions and trade-related conflicts impose significant pain. Thus, one is doing okay while the other is floundering under the same circumstances.
Furthermore, after recently looking into the details of EV ownership, I’ve come to this conclusion: pure EVs are rich people’s toys. They’re quirky, lose significant capacity under temperature extremes, and for Tesla, they’re not very reliable. That really hurts because EVs, with fewer moving parts, should be inherently more reliable than internal-combustion powered vehicles.
Now let’s consider the implications for TM stock. For decades, Toyota has garnered worldwide accolade for reliability. In fact, many of their cars are what I would call stupid-reliable. Plus, Toyota has the luxury Lexus brand that appeals to the snob.
So while autos generally aren’t a great play, TM is one of the stocks to buy for the long haul.
If you’re judging Boeing (NYSE:BA) strictly on the headlines, it’s almost impossible not to have serious doubts. When the first fatal accident involving a Boeing 737 Max occurred, the company enjoyed the benefit of the doubt. As a result, BA stock experienced a relatively quick recovery from the Lion Air incident.
But when a 737 Max operated by Ethiopian Airlines tumbled out of the sky, we had a horrific pattern. With mounting evidence against Boeing, BA stock had nowhere to go but down. Understandably, shares still haven’t recovered from its bearish trajectory because the optics remain terrible. For instance, Boeing’s CEO recently admitted mistakes in communicating the company’s onboard-safety system that’s at the center of the debate.
Sadly, that’s just the human-tragedy element of this story. BA stock also faces a competitive threat from Airbus (OTCMKTS:EADSY). Airbus offers very similar products with one obvious advantage: their planes don’t kill people.
Yet I’d still put Boeing on my list of blue-chip stocks to buy. Of course, this is a riskier contrarian play. However, because the airplane-manufacturing industry is so massive, airliners can’t just willy-nilly switch producers. Basically, they have to suck it up, which like it or not benefits BA.
I’ve been around the block long enough to know that the best laid plans don’t always go your way. That’s the primary catalyst driving stocks to buy in the insurance industry. The biggest one on most people’s minds is health insurance. But contrary to common assumptions, just having basic medical coverage won’t protect you from financial catastrophe. That’s where Aflac (NYSE:AFL) comes in.
You probably know Aflac from their comical commercials featuring the talking duck. But AFL stock and its underlying entity does serious business, specializing in supplemental insurance. Their website gives a great explanation of one of their products, demonstrating that a broken leg averages costs over $7,100. Traditional health insurance may only cover 60% of that care, leaving you on the hook for nearly $2,900.
For most families, they may not have that money laying around to pay off this unexpected bill. Aflac’s supplemental coverage, though, would cover most of that cost, leaving only a minor net out-of-pocket expense.
The best part about AFL stock is that it’s not just about accident coverage; instead, Aflac offers solutions for multiple segments, including critical illnesses and short-term disabilities.
And with the labor market having improved significantly over the years, people may want to protect what they’ve earned. That’s why you shouldn’t overlook Aflac when considering blue-chip stocks to buy.
As of this writing, Josh Enomoto is long T stock.