Is investing in the stock market really as risky as gambling in a Vegas casino? Well, it depends. Investing in penny stocks with lots of growth potential lends the chances for huge rewards, but also has huge risks. Investing in blue-chip companies lowers that risk and provides consistent and tangible rewards. However, what really classifies a company as “blue-chip”? Investopedia explains that a blue-chip company provides dominant products for their industry and is able to withstand an economic downturn, making investing in a blue-chip company relatively safe. These companies are usually market leaders who have established themselves as steady earners with well-established brand names. These are the blue-chip stocks to buy soon.
Investing in these blue-chip stocks is a great way to diversify your portfolio by having some stocks that can withstand any economic recession. Today, we’ll be highlighting three blue-chip stocks whose growth potential makes them an easy pick for any investor.
Blue-Chip Stocks to Buy Soon: American Express Company (AXP)
American Express Company (NASDAQ:AXP) is an international financial services corporation known for its credit card services, traveler’s cheques, and charge card offerings. The company is currently trading at $154.38, with Yahoo Finance analysts projecting a one-year price range of $117.89-$189.56, with an average target price of $164.15.
The persistent rise in consumer spending has allowed American Express to have a considerable increase in net income and sales. Net income increased to $2.451 billion, or $3.30 per share, in the third quarter of 2023 compared to the $1.9 billion net income, or $2.47 per share, recorded in Q3 2022. Additionally, credit quality has been higher than pre-pandemic levels, overall providing a promising future for American Express.
With high gross margins and a promising macroeconomic climate for continued expansion, American Express remains a discounted blue-chip stock that all investors should consider.
Bank of America Corporation (BAC)
Bank of America Corporation (NYSE:BAC) is a company that supports the improvement of its client’s financial lives. With a market cap of over $210 billion, Yahoo Finance analysts estimate that this stock will trade within a one-year price range of $25.46 – $46.21, with an average of $32.07.
Bank of America has many competitive advantages. Bank of America has been quickly expanding into international markets, giving it a foothold and economic moat over smaller, new entrants. This less dependence on a single market also has allowed Bank of America to increase its stability, especially during economic downturns.
Bank of America has a P/E ratio of 7.75 times compared to the sector average of 6.61 times. While it’s sitting at quite a fair valuation, BAC makes it up by demonstrating a historically stable compound annual growth rate of 2.3% and a dividend yield of 3.47%. With vast competitive advantages and a history of providing stable returns, I highly recommend this stock to any investor looking to hedge their risk.
Humana Inc. (HUM)
Humana Inc. (NYSE:HUM) is dedicated to providing affordable and reliable healthcare. In its past four quarters, Humana has continued to surpass analyst expectations. Currently, Yahoo Finance analysts estimate that this stock will trade within a one-year price range of $525 – $640, with an average of $587.53.
One year ago, the Inflation Reduction Act was passed by Congress, reducing the costs of certain drugs. Since then, Humana has benefitted since it allowed the company to increase benefits on its medical plans such as lowering the price of insulin and other drugs. In addition with the expectation of the global health insurance industry to grow from $2.1 trillion in 2021 to $3 trillion by 2028, Humana is guaranteed to see an influx of new customers.
Humana is currently sitting at a fair P/E valuation of 20.49 times compared to its sector median of 21.80 times. In the last five years, Humana has maintained a compound annual growth rate of 10.7% and a strong dividend growth of 12.41%. With the IRA serving as a strong catalyst, I recommend Humana to any investor looking to invest in a healthcare giant with high growth potential.
On the date of publication, Ian Hartana and Vayun Chugh 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.
