8 Blue-Chip Stocks to Buy to Fortify Your Portfolio


blue-chip stocks - 8 Blue-Chip Stocks to Buy to Fortify Your Portfolio

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The Dow Jones Industrial Average — the 30 blue-chip stocks at the heart of the U.S. economy — spent most of last week down. Much of that was traders jockeying with positions to see what the Federal Reserve was going to do about inflation.

Now that the decision is made — the Fed has bumped up its inflation forecast but left rates alone for now — the markets can get back to more day-to-day action.

The $1+ trillion infrastructure bill looks like it’s going to pass now and there may be a second stage to it. That’s good for high-quality blue-chip stocks, since they tend to be at the heart of the economy. When spending rises some of it’s usually landing in their pockets.

Not all the of the blue-chip stocks here are Dow stocks. However, they’re all quality stocks that are sector leaders and will do well as the global economy gets growing. And most are consolidating, which is a good time to buy.

  • Caterpillar (NYSE:CAT)
  • Deere & Co (NYSE:DE)
  • Danaher (NYSE:DHR)
  • United Parcel Service (NYSE:UPS)
  • Target (NYSE:TGT)
  • Philip Morris International (NYSE:PM)
  • Taiwan Semiconductor (NYSE:TSM)

Blue-Chip Stocks to Buy: Caterpillar (CAT)

Image of a yellow construction vehicle with the Caterpillar (CAT) logo on it

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With a market cap of $118 billion, this is one of the biggest industrial equipment companies in the world. From locomotives to mining equipment to on-site generators, CAT has built a global reputation for hard-working, heavy-duty equipment.

And if you’re interested in investing in the new efforts in space, then CAT is one of the blue-chip stocks planning the trip. It’s developing unmanned equipment that can be used to build out a colony site or mining operation remotely.

If you look at CAT’s long-term chart, you can see that CAT is a cyclical stock; it does well when economies are expanding and falls off when economic growth slows. Up 15% year to date and still distributing a 2.1% dividend, it’s off its 52-week highs. Now is the time to make hay.

The stock gets an ‘A’ rating from my Portfolio Grader.

Deere & Co (DE)

Several John Deere vehicles are parked outside of a building.

Source: Jim Lambert / Shutterstock.com

DE is like the CAT of the agricultural, forestry and landscaping markets. It has been in fields since 1837 and continues to dominate the competition, with a market cap of $106 billion.

For the suburban and ex-urban homeowners, maintaining their property with a Deere mower is a status symbol. But for farmers and others, having a Deere is all business. If it isn’t running or breaks down constantly, the farmer is losing time and money. DE’s success is evidence that its equipment has earned it a place with other blue-chip stocks.

DE stock is up 25% year to date, yet it’s still trading at a price-to-earnings ratio of 22x. That’s well below the average for the S&P 500.

The stock gets an ‘A’ rating from my Portfolio Grader.

Blue-Chip Stocks to Buy: Danaher (DHR)

image of laptop screen displaying danaher (DHR) website

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While not exactly a household name, DHR is one of the world’s leading life sciences and diagnostic companies. But it’s more of a holding company; it owns the top brands in a number of markets, including China.

The pandemic is a clear illustration of the need for quality diagnostic and testing equipment. But beyond this stark example lies the long-term power that lies in these markets. For example, China is making great strides in developing a modern, quality healthcare system to support its 1.5 billion citizens. That starts with the fundamentals.

And right now, DHR owns the company that can build and supply the equipment in China. In the U.S. and Europe, these legacy healthcare systems need to be modernized in approach and execution. Once again DHR stands to benefit.

DHR stock is up 16% year to date after a strong run during the pandemic.

The stock gets a ‘B’ rating from my Portfolio Grader.

Alphabet (GOOG)

Closeup of Google Pay on a smartphone.

Source: Primakov / Shutterstock.com

Alphabet certainly among the “2.0 version” of blue-chip stocks. Generally, we think about blue-chip stocks as having been around since horse and buggies were commonplace. But a new generation of companies are in the mix now — big tech.

GOOG is one of the most visible tech firms out there and it has a lot more going for it than the world’s largest mobile operating system (Android) and the world’s most popular search (and advertising) engine (Google). It has its hands in biotech, renewable energy, consumer products and autonomous vehicles to name a few.

Much of this fueled from its massive advertising revenue. But that pile of cash is going to keep rolling in and GOOG will continue to expand its presence.

The stock gets a ‘B’ rating from my Portfolio Grader.

Blue-Chip Stocks to Buy: United Parcel Service (UPS)

Dark brown delivery truck featuring the United Parcel Service (UPS) logo

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Delivering packages since 1907, UPS and its brown army are more visible on a day-to-day basis than any company on this list (except maybe Alphabet). And it has been that way for a long time.

Now this logistics company is a global force. And with a market cap of $147 billion, UPS is one of the most durable blue-chip stocks around. The stock ran up significantly during the pandemic, but the growth in e-commerce is here to stay. It also has built one of the most advanced logistics networks in the world, so it will always be an elite player.

UPS stock is up 22% year to date, and it has a 2% dividend. The stock gets an ‘A’ rating from my Portfolio Grader.

Target (TGT)

an image of bullseye the target (TGT) dog in a target store

Source: Robert Gregory Griffeth / Shutterstock.com

About eight years ago, TGT was on the ropes. It had experienced a massive cyberattack and its e-commerce model was not working well. That meant its major competitors were quickly putting digital distance between themselves and TGT.

But TGT rallied and it’s now back in the big box, e-commerce pack. It has upgraded its clothes designs and expanded its grocery selections in-store. And its online operation is world class and growing better every year. Plus, in-store pick up has been very popular as well, which makes use of its brick and mortar and online operations.

Up 32% year to date, TGT is trading far below the average P/E of the S&P 500 and delivers a decent 1.6% dividend.

The stock gets an ‘A’ rating from my Portfolio Grader.

Blue-Chip Stocks to Buy: Philip Morris International (PM)

A Phillip Morris (PM) sign on a glass building.

Source: Vytautas Kielaitis/Shutterstock.com

Yes, this is a sin stock. All of the old Philip Morris tobacco assets were rolled up into this company and its sister company Altria (NYSE:MO) operates all the non-tobacco assets. Why go with tobacco?

Because it’s still an enormous business outside (and inside) the U.S. Plus, the legalization of cannabis will also be a potential boon for PM. When states look to organize the disparate distribution and laws into a national system, few companies are better positioned to do it than PM. E-cigarettes also remain a key growth area, especially outside of the US.

If the tobacco stigma doesn’t bother you, PM remains a force among blue-chip stocks. And it’s still dirt cheap after a 23% run year to date, and delivers a solid 4.8% dividend.

The stock gets a ‘B’ rating from my Portfolio Grader.

Taiwan Semiconductor (TSM)

image of TSM semiconductor office building

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Aside from some international incident with China, TSM is well on its way to many strong years ahead. As one of the leading chipmakers in the world, it will be working overtime for years to meet the current demand for chips and processors now that almost everything we own has a chip in it.

The auto industry expects it will be two years before chip production meets demand. And other industries are similarly hamstrung because the pandemic shut down chip foundries.

The stock is consolidating now, so it’s a good time to get in before the next leg up.

The stock gets a ‘B’ rating from my Portfolio Grader.

On the date of publication, Louis Navellier has positions in GOOG, TGT and TSM in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Louis Navellier, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today.

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