After a strong start to the year, the stock market is showing some signs of resistance. The S&P 500 only inched up by 3% in March while the Nasdaq 100 is only up by 1%. The Federal Reserve put investors on notice by announcing that rate cuts aren’t the forgone conclusion that market participants had anticipated. This backdrop forms my list of blue-chip stocks to buy.
Stocks sold off on the news, including many blue-chip stocks. Sell-offs create long-term opportunities for patient investors. A bounce back is possible in April, but even if losses continue initially, these stocks should continue to march higher in the long run.
Discover the three blue-chip stocks to buy that you may want to accumulate to be prepared for a bounce back.
Walmart (WMT)
If interest rates stay higher for longer, consumers will continue to look for ways to save money on goods and services. Walmart (NYSE:WMT) has established itself as a leading retailer that offers affordable products. The company has recently made a bid to attract wealthier customers, and those efforts can pay off if economic challenges persist.
Walmart isn’t only a brick-and-mortar retailer. The company is gaining market share in the e-commerce and advertising industries. Global e-commerce sales increased by 23% year-over-year in the fourth quarter of 2023. Advertising revenue was up by 33% year-over-year and the recent Vizio acquisition will bolster this segment.
Walmart has multiple years to build out its compelling growth opportunities that should deliver higher profit margins. The stock currently trades at a 31 P/E ratio and has returns that resemble the S&P 500. Shares are up by 81% over the past five years. The stock also offers a 1.39% dividend yield while investors wait for a rebound.
American Express (AXP)
American Express (NYSE:AXP) shares get more enticing with every dip. The stock now has a P/E ratio below 20% despite delivering double-digit growth rates for revenue and net income. The company anticipates achieving those growth rates beyond 2026 which should deliver steady value for long-term investors.
The fintech company recently reported an 11% year-over-year increase in revenue. The company’s Q4 2023 report also featured a 23% year-over-year increase in net income. Corporations with expanding profit margins have a better chance of withstanding economic uncertainty.
American Express is well-positioned for various market cycles since people will always use credit and debit cards to make purchases. Even if consumers cut back or adjust their spending, credit and debit card transactions will be normal in good times and bad times. The stock offers a 1.28% yield, and the company recently raised its dividend by 17% this year. It’s an appealing dividend growth stock, especially as its valuation gets lower. All in all, it’s one of those blue-chip stocks to buy.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is the leading advertising platform. Many businesses flock to Google and YouTube ads to get in front of potential customers. The firm regularly posts rising revenue and earnings, and that trend continued in Q4 2023.
Revenue increased by 13% year-over-year during that quarter. Advertising growth remained strong, and Google Cloud did even better year-over-year. There’s some turmoil at the company due to AI blunders which presents a long-term buying opportunity. News around Alphabet will likely remain negative for a while, but that doesn’t change the company’s long-term prospects.
An exciting news item is speculation about Alphabet targeting a HubSpot (NYSE:HUBS) acquisition. This news hasn’t materialized in any meaningful way quite yet. The acquisition will be expensive if it comes to fruition, but it can help Alphabet accelerate revenue and earnings growth for several years. HubSpot is growing at a fast pace and is on the verge of profitability.
Alphabet is arguably the most overlooked Magnificent Seven stock. It only trades at a 28 P/E ratio.
On this date of publication, Marc Guberti held a long position in GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
