Emblematic of the vagaries of the new normal, July’s outstanding jobs report may be a net positive. The report, however, also undergirds the main reason why you should consider buying safe blue-chip stocks. True, in almost any other circumstance, the economy adding substantially more opportunities than analysts anticipated would be an encouraging sign. However, in the post-pandemic period, the strong report just gives the Federal Reserve an excuse to further tighten monetary policy.
With a robust labor force comes higher wages – and higher wages result in more money chasing after increasingly fewer goods. So presumably, if the Fed does nothing, the employment situation can push already high prices even higher. Therefore, the central bank must cool the fever without killing the patient. But that is easier said than done, providing another incentive for investors to buy safe blue-chip stocks.
None of these stocks will entice investors to get up at the crack of dawn like hot growth names can. Nevertheless, when investors don’t know where they’re going, these safe blue-chip stocks provide them with a true, reliable compass.
|ADM||Archer Daniels Midland||$83.43|
|AWK||American Water Works||$155.89|
If you had to look for an exciting public company that could become the next great innovator, Costco (NASDAQ:COST) would not be it. COST is technically beating the performance of the benchmark S&P 500, as the shares are declined 4.4% in 2022 through Aug. 8 while the index fell 14% during the same period. But that’s about as earthshattering as it’s going to get for the warehouse-style retailer.
However, if you’re looking for safe blue-chip stocks to buy, few names are as fundamentally dependable as Costco. I say that mainly because of the economic resilience of its largely affluent shopper base. According to data cited by Business Insider, the average Costco member is 39 years old, married and earns $125,000 annually.
Without picking on the salaries of other retailers’ customers, let’s just say that you’re going to be hard-pressed to find a more recession-resistant customer base than Costco’s. Therefore, if you anticipate that disaster is around the corner, look to COST as one of the best safe blue-chip stocks to buy.
Including IBM (NYSE:IBM) on any list of bullish stocks presents some challenges, particularly because of the company’s troubling history. While “Big Blue” is a technology icon, it spent a little bit too much time resting on its laurels when its competitors were gravitating towards new innovations like cloud computing.
Fortunately, though, the company has started to get its act together. Perhaps most notably over the last few years, IBM bought Red Hat, empowering the legacy tech giant with advanced hybrid cloud capacities. In addition, Big Blue has long been a pioneer in artificial intelligence and machine learning through its Watson initiative.
Of course, anyone who bought IBM stock thinking they’re going to get rich quick will probably be disappointed. However, investors looking for safe blue-chip stocks to buy should definitely consider IBM’s shares. Featuring many relevant business units and a forward yield of nearly 5%, IBM is built to run marathons, not the 50-meter dash.
Iron Mountain (IRM)
A few months ago, Forbes published an article which stated that in 2021, “the average number of cyberattacks and data breaches increased by 15.1% from the previous year. Over the next two years, the security executives polled by ThoughtLab see a rise in attacks from social engineering and ransomware as nation-states and cybercriminals grow more sophisticated.”
You can talk all you want about firewalls and other protective measures. In the world of cybercrime, nefarious actors are plentiful and the tech needed to wreak untold havoc is quite accessible. Therefore, the only foolproof solution to digital problems is to go completely analog. And that’s where Iron Mountain (NYSE:IRM) comes in. The company specializes in storing physical assets.
As online vulnerabilities escalate, more companies are likely to see the value in securing critical information on paper, tucked away offsite and sheltered from cyberattacks, physical theft and even disasters such as fires, floods and earthquakes. Technically, you couldn’t ask for a more secure name than IRM stock .
As the Colonial Pipeline cyberattack demonstrated, most people arguably take for granted midstream-related infrastructures until they stop working properly. Indeed, you can quantify the importance of midstream outfits by how much economic costs they impose during unforeseen shutdowns.
In a way, this is the derivative thesis of Enbridge (NYSE:ENB), which according to its website operates the world’s longest and most complex crude oil and liquids transportation system. This network comprises approximately 17,809 miles of active crude pipeline across North America – including 9,299 miles of active pipe in the U.S., and 8,510 miles of active pipe in Canada. Basically, the pertinence of this company would come into full view should it encounter a major disruption.
Further, as a midstream operator, Enbridge is generally insulated from the vagaries and volatility of upstream players (i.e. the exploration and production side, which can be hit or miss at times). Plus, with full electric-vehicle integration many years away, ENB is easily one of the best safe blue-chip stocks to buy.
Sempra Energy (SRE)
In many ways, I’d rather not discuss Sempra Energy (NYSE:SRE) simply because the utility doesn’t exactly have a sterling reputation among its customers. Sempra routinely angers public advocacy groups. Earlier this year, protesters accused the utility of price gouging. Naturally, I sympathize with my fellow southern California residents because I, too, suffer from the actions of Sempra.
Nevertheless, setting aside my own personal objections about the company, the harsh reality is that SRE is tied to some of the most financially robust regions in all of America. That doesn’t diminish the complaints that the company has generated. But more often than not, people in the Golden State can make things work.
In addition, the usual attributes of utility firms apply. In a digitalized world, losing access to electricity is almost a death sentence. Therefore, SRE is one of the safe blue-chip stocks to buy for long-term safety; you might have to plug your nose when you’re buying it, though.
Archer Daniels Midland (ADM)
Last month, Senegal’s Minister of the Economy, Amadou Hott, sounded the alarm regarding the global food crisis, a disaster which Russia’s invasion of Ukraine – a breadbasket for Europe and many developing nations – significantly exacerbated.
Indeed, Hott stated during a Group of 20 meeting that without an imminent resolution to the brewing food crisis – which also involves shortages and inflated prices – more people would die from famine than from the coronavirus pandemic.
These concerns underscore the importance of companies like Archer Daniels Midland (NYSE:ADM), which specializes in food processing. While the U.S. is unlikely to suffer a food shortage, the high inflation rate has imposed incredible hardships on many American families. Still, the harsh reality is that people have to eat, meaning that ADM is one of the best safe blue-chip stocks to buy.
While this thesis is cynical, ADM is also a practical investment. Despite gaining 24% in 2022, the shares are still fairly valued. As well, the company features solid growth and profitability metrics, boosting its appeal to the buy-and-hold types.
American Water Works (AWK)
While a food shortage might not devastate the U.S., this nation is already feeling the impact of water scarcity. Currently, mainstream headlines focus on the devastating consequences of climate change, perhaps best reflected by the declining water levels of Lake Mead. However, wasteful behavior and poor infrastructure also have contributed to this crisis.
To be clear, American Water Works (NYSE:AWK) is not a panacea. As a public water utility, American Water can’t protect the ozone layer nor can it convince people to stop wasting the Earth’s most precious resource. However, given that the planet quite literally runs on water, AWK enjoys a relevance that few other companies can touch.
Better yet, like Archer Daniels Midland which I discussed above, AWK represents a fairly valued investment. However, it’s down about 18% this year, meaning that contrarians might be interested in picking up its shares. Further, the company’s growth and profitability metrics are strong.
On the date of publication, Josh Enomoto 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.