Blue-chip stocks refer to companies that are established and have a strong record of delivering solid earnings and returns to investors. They also tend to be market leaders in the sectors in which they compete and have held dominant positions for many years, if not decades.
For these reasons, stocks of profitable blue-chip companies are often the safest investments during times of market volatility and upheaval. The share prices don’t tend to fall as much as unprofitable and unproven stocks that are viewed as being more speculative investments.
Blue-chip stocks also tend to recover faster in periods when the markets rise again. This is why we recommend the following seven no-brainer blue-chip stocks to buy right now if you have money to invest.
|HD||The Home Depot, Inc.||$273.32|
|BAC||Bank of America Corporation||$31.58|
|BRK-A, BRK-B||Berkshire Hathaway Inc.||$404,708.99, $270|
|F||Ford Motor Company||$11.32|
Blue-Chip Stocks to Buy: Apple (AAPL)
The consumer electronics giant, which was the first company in history to achieve a $3 trillion market capitalization, has not been immune to this year’s market downturn. So far in 2022, Apple (NASDAQ:AAPL) stock has fallen 26% to now trade at $131.23 a share. But rather than fret about the selloff, investors should use the decline in the share price to buy Apple stock hand over fist.
Silicon Valley-based Apple remains one of the biggest and best technology companies in the world and it is rare that investors get a chance at such a favorable entry point with the stock.
To be sure, Apple faces several overseas challenges that are weighing on its share price currently, including Covid-19 lockdowns in China that have impacted its manufacturing, and difficulty sourcing components and managing supply chains in Asia that threaten production of its popular iPhone, which generated $192 billion in revenue last year. However, innovations and market dominance should help Apple weather the storm. The company just announced a new iOS 16 operating system and expansion into buy now, pay later services.
Snack and beverage company PepsiCo (NASDAQ:PEP) is the type of stock that performs strongly in good economic times and bad.
Case in point, the Harrison, New York-based company’s share price is down only 10% year-to-date (YTD) compared to a 29% decline in the Nasdaq index on which it trades. At under $160 a share, PEP stock is currently trading 12% below its 52-week high of $177.62 per share.
The company’s products, which include everything from the Pepsi soft drink and Frito Lay chips to Quaker Oatmeal and the Gatorade sports drink, are considered essential grocery items by the consumers who love them.
In 2021, PepsiCo generated $79 billion in revenue off its food and beverage products. The company barely missed a beat during the Covid-19 pandemic as sales of its consumer products held up remarkably well. PepsiCo is also managing the current inflationary environment thanks to its pricing power, or ability to raise prices without losing customers.
Plus, PepsiCo pays a dividend that currently yields a strong 2.95% or $1.15 a share each quarter. In March of this year, PepsiCo announced that its raising its dividend 7%, bringing the total increase over the past five years to 43%. The company is also buying back $1.5 billion of PEP stock this year.
Blue-Chip Stocks to Buy: Home Depot (HD)
Long term, Home Depot is likely to remain a great investment given its dominance of the home renovation and do-it-yourself home repair markets. Even with this year’s decline, Home Depot’s stock has still gained 74% over the past five years.
While the current market carnage has dented Home Depot’s share price, it hasn’t harmed the company’s earnings. In mid-May, the Atlanta-based company reported its strongest first-quarter sales on record, announcing net income of $4.23 billion compared to $4.15 billion in the year earlier period. That works out to an earnings per share of $4.09 compared to $3.86 last year. Analysts were expecting the company to report earnings per share (EPS) of $3.68.
Looking ahead, Home Depot forecasts that its sales will increase 3% and earnings per share growth will be in the mid single digits, both better than Wall Street expectations.
Credit card companies haven’t done well over the past two years. The share price of Visa (NYSE:V), one of the three largest credit card issuers in the world, currently sits at $189.94, which is about 10% lower than the $210 they were trading at before the global pandemic hit in March 2020.
Coming out of the pandemic, with travel and dining out resuming, V stock was expected by many analysts to rebound strongly. But, despite some brief rallies, the share price has struggled to remain above $200 and is down 12% YTD.
Holding back V stock has been the slow return of higher-margin international transactions on its credit cards. While people are traveling again, they are doing so domestically with international travel lagging the recovery.
Visa is also grappling with the loss of its Russian business following that country’s invasion of Ukraine. Yet, despite its current issues, Visa remains a solid investment. Over the past five years, the stock has returned 102% to shareholders. Visa is currently selling for 30 times this year’s projected earnings, which is rock bottom for the company.
Blue-Chip Stocks to Buy: Bank of America (BAC)
Among financial stocks, Bank of America (NYSE:BAC) looks extremely cheap at its current price of $31.56 a share. Down 29% on the year amid a broad selloff in all bank stocks, BAC shares are currently trading at $31.57, 37% below their 12 month high of just over $50. Yet, the share price decline doesn’t take away from the fact that Bank of America, the second biggest lender in the U.S., remains a very appealing long-term investment.
Bank of America should perform well going forward as the interest on its variable rate loans resets at higher levels following rate hikes by the U.S. Federal Reserve. Additionally, Bank of America has improved its deposit base, which now sits at $1 trillion, and has invested significantly in technology to improve its online presence and transactions.
Plus, Bank of America has a big wealth management arm, and its trading unit continues to make hay out of the current stock market volatility. All and all, BAC stock remains a safe bet for investors.
Berkshire Hathaway (BRK.B)
Considered by many to be the ultimate blue-chip stock, Berkshire Hathaway (NYSE:BRK-A, BRK-B) has proven time and again that its share price can outperform the market in any environment. So far in 2022, BRK.B stock is down only 10% compared to a benchmark 23% decline for the S&P 500 index.
The holding company of legendary investor Warren Buffett owns a vast array of businesses that include everything from Geico insurance to the Dairy Queen fast food restaurant chain, as well as jewelers, railroads and the Fruit of the Loom underwear company.
Berkshire Hathaway also owns a massive portfolio of stocks that is valued at more than $300 billion and includes mostly blue-chip companies such as Apple, Bank of America and many others.
Buffett’s careful portfolio construction and buy and hold strategy has famously carried Berkshire Hathaway through many a market downturn, from the Black Monday crash of 1987 to the dot-com bubble bursting in 2000 and the 2008-09 financial crisis. And each time BRK.B stock has emerged stronger on the other side.
Blue-Chip Stocks to Buy: Ford (F)
Shares of legendary automaker Ford (NYSE:F) have been beaten up more than most stocks this year. The blue oval has seen its share price knocked down 45.5% year to date to now trade at $11.32 per share.
While the market downturn is to blame, Ford has also been hurt by ongoing difficulties with global supply chains that have made it difficult to source the parts needed for its vehicles, which has, in turn, slowed its production.
Yet, long term there’s plenty to like about Ford and its stock. The company is pushing hard into electric vehicles and has made no bones about the fact that it wants to challenge market leader Tesla (NASDAQ:TSLA) for supremacy in the space.
Electric versions of its iconic vehicles such as the Mustang sports car and F-150 pick-up truck could help the Detroit automaker gain market share and eventually become a global leader in the fast growing EV sector.
On the date of publication, Joel Baglole held long positions in AAPL, V and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.