Blue-chip stocks present a unique opportunity in volitile markets, and we volatility seems to be the watchword for the start of the year.
The stock market took a hammering in January, which turned out to be the worst start to the year in over a decade. The incredible volatility in the market is attributable to multiple macro-economic factors, which have investors scrambling to safe-haven investments. Hence, it’s best to add a few blue-chip stocks to your portfolio to minimize risks.
Investors are caught amid a perfect storm in the stock market. The Fed’s hawkish policies, the rising inflation, geopolitical tensions, and the pandemic’s grip over the world have pulverized market returns. Moreover, the Cboe Volatility Index is up over 70% year-to-date.
Hence, in the current scenario, it’s best to bet on blue-chip stocks with a long track record of top and bottom-line growth. Additionally, these companies also have strong track records of growing shareholder rewards despite the challenges presented by the market.
Let’s now look at seven of the most attractive blue-chip stocks to buy at this time.
- Apple (NASDAQ:AAPL)
- Walmart (NYSE:WMT)
- Exxon Mobil (NYSE:XOM)
- Pfizer (NYSE:PFE)
- Intel Corporation (NASDAQ:INTC)
- Costco Wholesale (NASDAQ:COST)
- Lockheed Martin (NYSE:LMT)
Blue-Chip Stocks to Buy: Apple (AAPL)
Apple has had a phenomenal run in the past couple of years, crossing $3 trillion in market capitalization last month.
Despite the challenges, AAPL stock has generated solid returns over the past year, driven by staggering growth across all its business segments. The iPhone market boasts a most innovative product lineup with a loyal customer base.
The free cash flow juggernaut boasts a levered FCF growth of 20%. Its cash flow expansion rate is stunning and will continue to grow with its top-line. Revenue growth is over 28.5% on a year-over-year basis, comfortably ahead of its 5-year average.
Apple has done incredibly well to leverage several secular megatrends, including 5G, the metaverse, streaming, EVs, and whatnot. Hence, if there’s one blue-chip to buy, you’d want to invest in AAPL.
Walmart has proven time and being that it’s the template for its sector.
The retail giant has dominated the brick-and-mortar sector and has significantly expanded its eCommerce wing. Though the pandemic has slightly altered its growth trajectory, its long-term case remains firmly intact.
During the first nine months of fiscal 2022, Walmart’s $416 billion sales increased by 3% compared with the prior-year period. However, its net income slid 35%.
Nevertheless, it projects optimism and expects a 6% growth in comparable sales for the year. It has also raised earnings guidance for the year by 20 cents to $6.40 per share.
Looking ahead, the company will continue improving its eCommerce productivity and return to winning ways with its brick-and-mortar business.
Blue-Chip Stocks to Buy: Exxon Mobil (XOM)
Exxon Mobil grew its earnings at an astounding pace last year. Year-over-year growth in its EBITDA is at a spectacular 75%.
The oil and gas giant also is ramping up capital expenditure to explore a clean energy future and offers an attractive 4.37% dividend yield with remarkable consistency.
Exxon Mobil saw a massive improvement in its top-line due to the robust crude oil prices last year. Revenues grew at a rapid clip while it managed to reduce debt levels by a colossal $20 billion.
It improved its breakdown significantly by getting a better handle on costs. Additionally, it could spend a truckload of cash on expanding its low carbon efforts.
With an impressive asset portfolio, outstanding financials and a tremendous outlook ahead, XOM stock is in a fantastic position to grow for the foreseeable future.
Pharmaceutical giant Pfizer has raked in billions from coronavirus vaccines sales, and its vaccines continue to be in high demand with the emergence of new variants of the virus.
Vaccine sales contributed $36 billion in sales last year, doubling revenues for the company from 2020.
Pfizer has demonstrated superb execution and scaling capacity, making it a top vaccine manufacturer in the west.
Moreover, the pandemic is expected to be endemic, and the vaccine maker can still rake in plenty of moolah for the foreseeable future.
It is also developing new products such as an oral antiviral tablet to treat early-stage Covid 19 symptoms. Hence, PFE stock still has a strong growth runway ahead.
Blue-Chip Stocks to Buy: Intel Corporation (INTC)
Intel is one of the most powerful tech giants globally, with a market cap of over $180 billion.
It is a household name in the semi-conductor space possessing superior manufacturing capabilities. In recent years, though, it has ceded a considerable amount of market share to its peers.
It now looks as if Intel has a clear road to claw back its market share and expand into other profitable verticals.
As we advance, the company will be looking to source some of its components from TSMC (NYSE:TSM) in speeding up chip development.
It also plans to set up its personal chip foundry service, and its acquisition of autonomous driving solutions provider Mobileye could potentially unlock $50 billion in value.
Also, Intel has the organic resources to pursue its developments plans, as it continues to generate unbelievable cash flows.
Blue-Chip Stocks to Buy: Costco Wholesale (COST)
Retail giant Costco has been one of the most consistent performers in its sector.
Last year, the company grew its top and bottom lines by double-digits by 17.5% and 25.1%, respectively.
With its water-tight balance sheet and unique competitive advantages, COST stock has been one of the top growth stocks over the years.
Costco added 22 new warehouses to expand its outreach and more than 6 million new members to its subscription service, with a roughly 92% renewal rate.
Though its membership fees represent a small portion of sales, they contribute immensely to expanding profitability margins.
The ability to offer low prices fuels membership growth. Hence, there’s plenty to love about COST stock as a long-term bet.
Lockheed Martin (LMT)
Lockheed Martin is the leading defense contractor for the United States government.
It has become a juggernaut in the space by being a provider of the F-35 JSF program.
The company has been a robust performer with double-digit average revenue growth over the past five years while generating a monstrous 53% return during the same period.
Last year, the company delivered 142 F-35 jets to its customers, beating its previous guidance of 139 deliveries. Moreover, it expects to nail its production goal of 151-153 jets next year. The stellar performance has led to a healthy increase in its FCF margin to 7.3%. On top of that, it’s maintained its reputation as a top income stock in the space, with a 2.9% yield and a payout ratio of over 35%.
On the date of publication, Muslim Farooque did not have (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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.