10 Blue-Chip Stocks to Buy for Long-Term Safety

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best blue-chip stocks - 10 Blue-Chip Stocks to Buy for Long-Term Safety

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Amid the novel coronavirus pandemic, it’s reasonable to be attracted to the best blue-chip stocks on the Street.

After all, blue chips are supposed to be big and safe, with a strong, reliable history of sustained growth, and good prospects for future growth. Blue-chip stocks also tend to feature strong balance sheets, and economically resilient business fundamentals. They also sometimes have a nice dividend.

In other words, blue-chip stocks are safe stocks. And during this time of unprecedented stock market turbulence, buying safe, blue-chip stocks is a winning strategy for risk-adverse investors.

But not all blue-chip stocks are equal. So which blue-chip stocks should you buy for long-term safety?

Blue-Chip Stocks to Buy for Long-Term Safety: Disney (DIS)

Blue-Chip Stocks to Buy for Long-Term Safety: Disney (DIS)

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Global media giant Disney (NYSE:DIS) checks all the boxes of a long-term winning blue-chip stock.

Disney is a $190 billion global media conglomerate, with a 1.6% dividend yield that is supported by nearly $7 billion in cash on the balance sheet. Revenues have grown at a steady 7% compounded annual growth rate since 2010. Diluted earnings per share have grown at a 14% annual clip over that same stretch. And, perhaps most importantly, stock in Walt Disney has roared higher by more than 230% since 2010.

Meanwhile, when it comes to the fundamentals, Disney is as good as it gets. Sure, many of the company’s operating businesses are shut down because of the novel coronavirus pandemic. But this pandemic won’t last forever. Once it passes, Disney’s parks will open back up, movie theaters will re-open, TV advertising spending will pack back up and the entire Disney growth narrative will get back to steady high-single-digit revenue growth and double-digit profit growth.

So, if you’re looking for long-term stability and steady returns, DIS stock is a great buy here amid recent coronavirus-related weakness.

Berkshire Hathaway (BRKA)

Berkshire Hathaway (BRKA)

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When it comes to large-cap, blue-chip stocks, few offer has much long-term safety as Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B).

Led by Warren Buffett, Berkshire Hathaway is a $450 billion U.S. business conglomerate with exposure to necessary business verticals like transportation, housing and insurance. Since 2010, Berkshire’s revenues have grown at a 6% compounded annual growth rate, profits have grown at a 23% compounded annual growth rate and the stock has risen 185%.

This steady growth will persist over the next decade. The coronavirus pandemic will pass within the next few months. Once it does, Berkshire’s transportation, housing, and insurance businesses will continue to see a steady rise in demand, which will power consistent and stable mid-single-digit revenue and profit growth. The $130 billion in cash on the balance sheet also gives the company ample firepower to make a splashy acquisition and supercharge the growth profile.

Net net, Berkshire Hathaway is a really safe stock to buy here, thanks to the strong balance sheet, with healthy upside potential over the next few years.

McDonald’s (MCD)

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In the overlap of blue-chip stocks and food stocks, McDonald’s (NYSE:MCD) stands in a class of its own.

This is a $140 billion company which has dominated the fast food industry for the past few decades. Sure, revenues are down over the past few years thanks to huge re-franchising initiatives. But comparable sales have been consistently positive, and earnings per share have grown at a 6% compounded annual growth rate since 2010. MCD stock is also up 200% since 2010, and features a 2.7% dividend yield.

Over the next decade, McDonald’s will continue to dominate the fast food industry. That’s because this company dominates on the two things which matter most to consumers: price (McDonald’s always offers some of the best prices in the market) and convenience (the company’s unparalleled physical footprint means that its stores are everywhere). Sustained dominance on the price and convenience fronts, coupled with menu innovation and digital expansion, will continue to power strong results at McDonald’s for the foreseeable future.

Those strong results will help keep MCD stock on a winning path.

Intel (INTC)

Intel (INTC)

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In the secular growth semiconductor world, the blue-chip stock to buy is Intel (NASDAQ:INTC)

Intel is the 400 pound gorilla and $250 billion giant in the global semiconductor market. For the past decade, the company has commanded north of 17% revenue share in the global semiconductor market, a dominant run which has propelled 6% compounded annual growth in revenues, 10% compounded annual growth in profits, and a 190% rise in INTC stock.

All of these favorable dynamics will persist over the next decade. The semiconductor market will continue to grow at a rapid pace, propelled by multiple breakthrough technologies like 5G, the Internet-of-Things, cloud computing, Artificial Intelligence, and self-driving. In that market, Intel will leverage its size, resource, and partnership advantages to sustain industry leading market share. Revenues will power higher. So will profits.

And so will Intel stock.

Apple (AAPL)

Apple (AAPL)

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One of the larger companies on this list, $1.2 trillion global technology giant Apple (NASDAQ:AAPL) also doubles as a safe, steady blue-chip stock to buy now.

Apple checks all the boxes you want a blue-chip stock to check. Dividend yield? Apple has a 1.1% yield. Strong balance sheet? The company has $207 billion in cash on hand. Strong growth history? Revenues have grown at a 17% compounded annual growth rate since 2010, while profits have grown by more than 20% per year. AAPL stock is also up a whopping 830% since 2010.

Meanwhile, the fundamentals underlying Apple imply that steady growth is here to stay. Over the next decade, Apple will continue to launch new phones and smart IoT devices, the sum of which will keep the hardware business stable. At the same time, the company will continue to develop, roll-out and expand a plethora of software solutions (like Apple TV+ and Apple Music) to sell to its huge hardware install base. This will propel steady, high-margin growth in the company’s software business, which will provide a nice boost to profit growth.

All in all, Apple over the next decade will remain a steady revenue and profit grower with a rising stock price.

Starbucks (SBUX)

Starbucks (SBUX)

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As the unparalleled global giant in the coffee retail world, Starbucks (NASDAQ:SBUX) is a great blue-chip stock to buy now for long-term safety.

Starbucks is a $92 billion global coffee house operator with a second-to-none physical presence in every important consumer market. The company has leveraged its global dominance to grow revenues at an 11% compounded annual growth rate since 2010, and profits at a 19% annual clip. SBUX stock is also up 580% over that same stretch, and features an attractive 2.1% yield (which is supported by more than $3 billion in cash on the balance sheet).

Sure, many Starbucks locations across the globe are closed today. But the pandemic will pass. When it does, Starbucks stores will re-open everywhere. Consumers will get back into their daily routines, which include a daily Starbucks run (or two). The company will continue to report strong sales and profit growth.

And Starbucks shares will charge higher, too, meaning recent weakness in this long-term winner is nothing more than a safe, long-term buying opportunity.

Facebook (FB)

Facebook (FB)

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In the overlap of growth stocks and blue-chip stocks, global digital advertising giant Facebook (NASDAQ:FB) is the cream-of-the-crop.

Facebook is a high-quality growth stock. The company has leveraged its unparalleled reach across the global digital ecosystem to achieve and sustain dominance in the secular growth digital advertising industry. This sustained dominance has powered nearly 50% compounded annual revenue growth at the company since 2010, and over 40% compounded annual profit growth. Concurrently, Facebook is a high-quality blue-chip stock, with a $530 billion market cap, $55 billion in cash on the balance sheet and a giant moat that includes four billion-user-plus digital apps.

Over the next decade, Facebook’s growth narrative will remain robust. The company will rapidly expand ad real estate on its largely un-monetized but widely used communications apps, Messenger and WhatsApp. At the same time, Facebook will plunge more aggressively into the e-commerce world, building out online selling capabilities on Facebook and Instagram. This combination of increased ad real estate and new e-commerce capabilities will power sustained 20%-plus revenue and profit growth at Facebook for the next few years.

That big growth will keep Facebook’s stock — up 385% from its 2012 initial public offering (IPO) — on a winning trajectory.

Alphabet (GOOGL)

goog stocks to buy

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Next to Facebook, another high-quality blue chip stock which doubles as a high-quality growth stock is Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL).

The $875 billion digital advertising and cloud computing giant has leveraged digital economy tailwinds to drive roughly 20% compounded annual revenue growth and 16% compounded annual profit growth since 2010. During that stretch, stock in Google’s parent company has risen by more than 300%. But, Alphabet is more than just growth. It’s stability and safety, too, with a moat that includes Google Search (the backbone of the internet) and a balance sheet that is loaded with $73 billion in cash.

Over the next several years, a few things will happen. Alphabet’s ad business will continue to grow as more video ad dollars flow into online video platforms like YouTube. The company’s cloud computing business will continue to ride the enterprise physical-to-digital migration wave to the tune of 20%-plus growth. And Alphabet’s self-driving arm, Waymo, will turn into a meaningful revenue contributor as autonomous driving transitions from concept, to product.

As all that happens, Alphabet’s growth narrative will remain robust, and Alphabet’s stock will power higher.

Nike (NKE)

Nike (NKE)

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In the apparel world, the best blue-chip stock to buy for long-term safety is Nike (NYSE:NKE).

The $140 billion athletic apparel giant has leveraged athlete endorsements, relentless product innovation, and purpose-driven marketing to turn into the world’s most valuable and dominant apparel brand. The numbers speak for themselves. Revenues have grown at an 8% annual clip since 2010. Profits have grown at an 11% annual clip since 2010. NKE stock has rallied 440% over that stretch.

The company also pays a yield (1.1%) and has a cash-heavy balance sheet (nearly $3 billion in near-cash).

Over the next few years, the athletic apparel industry will remain red-hot, supported by rising consumer demand to be active, healthy, and fit. Nike will remain the “top dog” in that industry, behind a second-to-none athlete endorsement portfolio, accelerated product innovation, and unique marketing. The company will sustain mid-to-high single-digit revenue growth, and high single-digit to low double-digit profit growth.

As that happens, Nike’s stock will keep moving higher.

Microsoft (MSFT)

Microsoft (MSFT)

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Last, but not least, on this list of blue chip stocks to buy for long-term safety is the world’s biggest company, Microsoft (NASDAQ:MSFT).

Microsoft didn’t wind up as a $1.3 trillion company by accident. The company leveraged cloud computing tailwinds to drive steady 8% annual revenue growth. It also drove 10% annual profit growth since 2010, a stretch during which Microsoft rose a whopping 463%.

Those cloud computing tailwinds will remain robust over the next decade. Enterprises will continue to migrate to the cloud, creating huge demand for Microsoft’s cloud-hosted infrastructure (Azure), productivity (Office 365), and communications (Teams) solutions. Huge demand for those tools will sustain big revenue and profit growth at Microsoft.

That big revenue and profit growth will keep Microsoft’s stock holders on a solid uptrend for the foreseeable future.

In sum, consider this list of blue-chip stocks to buy now:

  • Disney
  • Berkshire Hathaway
  • McDonald’s
  • Intel
  • Apple
  • Starbucks
  • Facebook
  • Alphabet
  • Nike
  • Microsoft

Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been recognized as one of the best stock pickers in the world by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm.  As of this writing, he was long FB and MSFT. 


Article printed from InvestorPlace Media, https://investorplace.com/2020/05/best-blue-chip-stocks-to-buy-for-long-term-safety/.

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