Blue-Chip Beauties: 3 Stable Stocks to Buy for Long-Term Growth

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  • Explore three stable blue-chip stocks ripe for long-term gains to anchor portfolios.
  • Berkshire Hathaway (BRK-A, BRK-B): With its strong balance sheet and wide-moat subsidiaries, this conglomerate has cemented itself as an enduring blue chip.
  • Alphabet (GOOG, GOOGL): Anchored by core Google properties, this tech juggernaut provides stability alongside visionary moonshots.
  • UnitedHealth Group (UNH): As the largest healthcare company in the U.S., it offers resilience across cycles with its mix of payers, providers and services.
STABLE BLUE-CHIP STOCKS - Blue-Chip Beauties: 3 Stable Stocks to Buy for Long-Term Growth

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Stable blue-chip stocks represent the pinnacle of stability and reliability for long-term investors. These established titans boast strong financials, durable competitive advantages, and histories of weathering market volatility. While they may not generate sky-high returns, blue chips provide the resilience and predictability that risk-averse investors prize.

Specifically, blue-chip companies possess wide economic moats, formidable brands and savvy management teams that steer steady growth. As Warren Buffet emphasizes, impenetrable moats and prudent capital allocation decisions separate the blue-chip wheat from the chaff. These stocks harness enduring competitive edges across their industries.

For conservative investors focused on minimizing risk while reaping reasonable rewards, stable blue-chip stocks are essential portfolio pillars. They provide ballast against choppy markets and reliably deliver dividends and steady share price appreciation. While they may lag during bull markets, blue-chip stocks hold their ground when markets retreat. Their scale and maturity also ensure stability even in turbulent macroeconomic environments.

This article explores three blue-chip beauties poised for long-term gains. These stable blue-chip stocks check all the boxes: strong finances, wide moats, seasoned leadership and compelling valuations. Together, they provide the resilience and predictability to anchor portfolios for years ahead.

Berkshire Hathaway (BRK-A, BRK-B)

The logo for Berkshire Hathaway displayed on a smartphone screen.
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With its fortress balance sheet and wide-moat subsidiaries, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has cemented itself as one of the most stable and enduring blue chips. This conglomerate oversees diverse operations, including insurance, railroads, utilities and manufacturing. If we then add the resilient cash flows and its $157 billion cash stockpile, Berkshire forms a long-term portfolio bedrock, making it one of the most attractive and stable blue-chip stocks.

Berkshire’s stability stems from both diversified operations and sage leadership. As Warren Buffett plans his CEO exit, successor Greg Abel is poised to carry Berkshire’s values forward with his prudent capital allocation approach and operational expertise.

This durability shows in Berkshire’s proven growth record, with revenues climbing from $162 billion in 2012 to over $302 billion in 2022 and operating earnings hitting a record $10.8 billion in Q3 2023. In addition, with recent acquisitions like Pilot and increased ownership of Japanese trading houses, Berkshire retains an enduring global edge. Its mix of wholly-owned gems and stock holdings position it mightily for durable growth ahead. For investors seeking an all-weather and one of the more highly stable blue-chip stocks, Berkshire stands tall as a stable cornerstone.

Alphabet (GOOG, GOOGL)

Alphabet Inc. (GOOG, GOOGL) and Google logos seen displayed on smartphones. The Google stock split is happening today.
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As one of tech’s most innovative juggernauts, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has evolved into a diversified digital conglomerate powering global communication. With tentacles in online ads, cloud, artificial intelligence (AI) and more, Alphabet generates immense cash flows to reinvest in moonshots. Anchored by core Google properties and its $150 billion stockpile, Alphabet has the stability and vision to drive transformational growth, which is why it’s on this list of stable blue-chip stocks.

While ad revenue missed last quarter, Alphabet’s Q4 sales still rose 13% year-over-year to $86 billion. Its leadership in search, YouTube, and Android ecosystems provides a reliable growth engine. However, Google advertising still delivered over $65 billion in the quarter.

Generative AI could propel the next wave of innovation, as Alphabet’s new Gemini model aims to surpass OpenAI capabilities. Alphabet is pouring resources into integrating AI across products. Cloud and Waymo underscore emerging secular tailwinds beyond ads, with Cloud revenue rising 26% this past quarter. Potential economic and competitive headwinds have not slowed Alphabet’s strategic progress.

Furthermore, Ruth Porat’s prudent financial leadership complements Sundar Pichai’s ambitious technology vision. With its reliable ad business, AI breakthroughs and diversified digital empire, Alphabet has both stability and vision to generate outsized returns.

UnitedHealth Group (UNH)

The UnitedHealth (UNH) headquarters in Minnetonka, Minnesota.
Source: Ken Wolter / Shutterstock.com

As the largest healthcare company in the United States by revenue, UnitedHealth Group (NYSE:UNH) has firmly established itself as a stable blue-chip stocks. This healthcare juggernaut boasts over 50 years of steady expansion across the payer, provider, and pharmacy benefit manager spaces.

In 2023 alone, UnitedHealth Group generated more than $370 billion in total revenue stemming from its two core pillars — UnitedHealthcare and Optum. Optum, the fast-growing health services business, witnessed a 22% surge in annual revenues to $172 billion. This robust performance is a testament to the company’s capacity to capture diverse revenue streams. In addition, growth has also arrived by cementing strategic partnerships, exemplified by its total acquisitions exceeding $41.1 billion.

UnitedHealth has delivered consistent growth, with revenues expanding at a 14% compound annual growth rate (CAGR) over the past five years. Earnings per share have also increased at an impressive 16% annual rate over this period.

With shares rising over 50% in three years alongside growing dividends, UnitedHealth offers investors resilience against volatility. The company’s sheer size, with a market capitalization nearing $500 billion, and a defensive business model that is largely immune to economic cycles ensures predictable returns.

In addition, going forward, UnitedHealth is making waves through its emphasis on digital health capabilities spanning telehealth, data analytics, and blockchain platforms. This future-forward outlook builds on the company’s track record of strategic capital deployment, fueling value for long-term shareholders and making it one of the more attractive and stable blue-chip stocks.

On the date of publication, Andrea van Schalkwyk held long positions in BRK.B and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Andrea van Schalkwyk is a value investor who adheres to the principles of the renowned Warren Buffett and his mentor Benjamin Graham. He holds a Master of Engineering (MEng) from the University of Padua and an Executive MBA from the CUOA Business School.


Article printed from InvestorPlace Media, https://investorplace.com/2024/02/blue-chip-beauties-3-stable-stocks-to-buy-for-long-term-growth/.

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