3 Blue-Chip Stocks to Buy Now: Q2 Edition


  • Blue-chip stocks to buy now with potential upside for the rest of 2024.
  • BlackRock (BLK): The asset manager saw best-in-industry asset inflows in the latest quarter.
  • Nike (NKE): This iconic footwear company trades at a steep discount to its historical multiple.
  • Lamb Weston (LW): The earnings selloff was overdone and the stock trades at 15 times forward EPS.
Blue-Chip Stocks to Buy Now - 3 Blue-Chip Stocks to Buy Now: Q2 Edition

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Well-established companies with a long history of operations are your best road to riches. In today’s market, several blue-chip stocks to buy now are still trading at reasonable multiples.

If you are looking for safe investments, blue-chip stocks to buy now provide stable returns at lower relative risk. Since these are dominant stocks in their industry, they generate steady growth throughout the economic cycle. They also exhibit healthy profitability and have high returns on equity.

Another distinguishing characteristic is dividend payments. Due to their higher profit margins, these companies generate a lot of free cash flow. As a result, they pay out a portion of these profits to shareholders.

The following blue-chip stocks to buy are bargains today. They have dividend yields above 1%, operating margins over 10% and returns over equity above 20%. These high-quality companies have withstood the test of time and will thrive going forward.

BlackRock (BLK)

Closeup of the BlackRock (BLK) sign seen at the entrance to the American global investment management corporation BlackRock, Inc.'s office in San Francisco, California.
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BlackRock (NYSE:BLK) is the largest asset manager in the world, with $10.5 trillion in assets under management. It offers various index, active and cash management services to clients in over 100 countries. Furthermore, the company provides multiple investment and risk management services through its Aladdin platform.

As Q1 fiscal year 2024 results revealed, the company is going from strength to strength. In the quarter, the company recorded $76 billion of quarterly long-term net inflows, bringing the total over the last 12 months to $236 billion. AUM was $1.4 trillion higher compared to the prior-year quarter.

Due to the growth in AUM and demand for technology services, revenue increased 11% year-over-year to $4.7 billion. Like other top blue-chip stocks to buy now, Blackrock continued its impressive track record of shareholder returns. It repurchased $375 million of shares and increased the quarterly dividend by 2% to $5.10 per share.

Looking ahead, the firm sees opportunities in retirement and whole portfolio solutions, technology and infrastructure. Particularly, it aims to capitalize on the demand for infrastructure investments. Over the past 12 months, BlackRock’s infrastructure platform delivered 19% organic asset growth. Management expects the acquisition of Global Infrastructure Partners to position this business for further success.

As capital markets develop and clients look for passive and active investing solutions, BlackRock will continue to grow. At 19x forward EPS, it’s a long-term compounder you will not regret buying.

Nike (NKE)

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Nike (NYSE:NKE) is one of the most storied and iconic brands. However, over the last two years, it has failed in its innovation efforts, allowing competitors like On Holdings (NYSE:ONON) and Deckers Outdoor (NYSE:DECK) to grab market share. As a result, shares are languishing near 52-week lows.

It may seem counterintuitive, but NKE stock is one of the blue-chip stocks to buy now. First, it is still a favorite brand among consumers. Indeed, the recent Piper Sandler Taking Stock With Teens survey revealed that it is the No. 1 favorite footwear brand among teens.

Secondly, management is engineering a turnaround focused on dialing up innovation. On April 11, the company launched its new footwear collection ahead of the Paris 2024 Olympic Games. The latest designs are optimized for performance using AI technology. Management hopes upcoming consumer releases will reinvigorate the brand.

Lastly, NKE stock is trading at very low multiples relative to history. This high-quality company is offering an opportunity to purchase shares at a material discount to its historical multiple. As of this writing, the stock trades at 25x forward non-GAAP EPS compared to the five-year average of 36x. Buy this stock before the turnaround gains steam; otherwise, it will be too late.

Lamb Weston (LW)

LW stock: a bag of potatoes open with potatoes spilling out
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Sometimes, the best time to buy is when there is blood on the streets. That’s what happened to Lamb Weston (NYSE:LW) on April 4 after it announced results that were negatively impacted by the migration to a new enterprise resource planning system. The stock reacted negatively, falling by over 20%.

This selloff presents an opportunity in Lamb Weston since management disclosed that the main reason for the earnings miss was the ERP transition. “The ERP transition temporarily reduced the visibility of finished goods inventories located at distribution centers, which affected our ability to fill customer orders,” said Tom Werner, CEO.

Fundamentally, nothing has changed in the business to affect the long-term outlook. It is one of the largest suppliers of frozen potatoes, a staple-like business. It sells frozen potatoes, sweet potatoes, appetizers and vegetable products to retailers and restaurants.

Indeed, according to management’s fiscal year 2024 guidance, LW stock is one of the best blue-chip stocks to buy. They estimate net sales of $6.54 billion to $6.60 billion and GAAP diluted EPS of $5.30 to $5.45. Based on this guidance, the stock trades at only 15x forward earnings.

Bank of America analysts believe the earnings selloff was overdone and remain optimistic. Although they cut their price target to $113, they reiterated their “buy” rating. If the sequential sales rebound they expect occurs, LW stock will quickly return to over $100.

On the date of publication, Charles Munyi did not hold (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.

Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/3-blue-chip-stocks-to-buy-now-q2-edition/.

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