The bull market continues; markets quickly dusted off the 5% correction in April and soared to new highs. With too much cash on the sidelines, every shallow correction has become a buying opportunity. Blue-chip stocks are one way to play this positive momentum.
From a historical perspective, the markets are in great shape for continued gains. In the first 100 trading days of 2024, the S&P 500 has had about a 10% gain. JPMorgan Wealth Management noted that since 1950, that has meant a stronger second half, with the index closing the year with a 25% average return.
Besides, the economic and earnings data support this positive view. Economic activity has been resilient, buoyed by fiscal programs geared towards infrastructure and bringing back supply chains to the U.S. Earnings have also surpassed expectations, and analysts project more gains in the second half.
Considering this confluence of positive economic and technical factors, the market’s direction will likely be up. These blue-chip stocks will help you capture gains as we hit new highs.
Abbott Laboratories (ABT)
This medical device and nutrition maker is a compelling opportunity. At 22 times forward EPS and a 2% dividend yield, it’s a get-rich slowly story.
Most Abbot Laboratories (NYSE:ABT) segments are firing on all cylinders and delivering solid growth. That said, the diagnostic segment — which benefited from COVID-19-related sales — has been a drag on growth. However, now that it’s lapping these tough comparisons, upcoming quarters could be much better.
Looking at the other segments, the company has delivered impressive growth. In Q1 2024, the nutrition business delivered 7.7% organic revenue year-over-year (YOY). Growth in other segments was even better. Established pharmaceuticals and medical devices showed organic growth of 13.7% and 14.3%.
Altogether, total reported revenues in Q1 surged 2.2% to $9.9 billion. On an organic basis, revenue grew 4.7%. Even better, after excluding the impact of COVID-19 testing, sales growth was 10.8%.
For fiscal year 2024, the company raised guidance to reflect the strong start and double-digit growth in medical devices and established pharmaceuticals. Now, management expects adjusted diluted EPS of $4.55 to $4.70. Excluding COVID sales impacts, Abbott is growing revenues at a double-digit rate and is one of the top blue-chip stocks.
Blackstone (BX)
Blackstone (NYSE:BX) is one of the best-in-class operators in the private equity industry. It is the largest real estate manager globally, with a knack for spotting industry changes and adjusting to capitalize. For instance, it dumped most of its commercial real estate and invested in industrial, such as warehouses, before the current commercial real estate crisis hit.
Today, it has over $1 trillion in assets under management. Going forward, the company is well positioned to leverage its global scale and premium brand to dominate in real estate. Thus, it will continue growing its recurring revenue base and generating strong cash flow, making it one of the top blue-chip stocks to buy.
Moreover, the private equity giant has set its sights on one of the most lucrative markets going forward — private wealth. More institutions and wealthy families are opting for private investment vehicles rather than public markets. Blackstone thinks this market is an $80 trillion opportunity and already owns 230 companies around the world.
Lastly, Chief Operating Officer Jonathan Gray plans to turn Blackstone into the world’s biggest capital provider. As of the end of Q1, the credit and insurance segment had $329.6 billion in assets under management. Blackstone has one of the best credit platforms and will capitalize on the secular rise of private credit.
Estée Lauder (EL)
Estée Lauder (NYSE:EL) is a premium beauty brand with a turnaround story. It’s one of the blue-chip stocks that hasn’t participated in this bull market. However, it presents a catchup opportunity that could lead to substantial gains.
Indeed, the beauty giant has had some self-inflicted issues over the past two years. The company has ceded share to competitors in the U.S., and the bet on a robust China recovery failed to materialize. As a result, for the fiscal year ending June 30, 2023, sales slumped 10%. At the same time, net income declined a staggering 57%.
That said, EL stock could stage a powerful comeback if the progress shown in Q3 FY2024 results continues. In the quarter, sales grew 5% YOY to $3.9 billion. Operating income increased from $297 million in Q3 FY2023 to $531 million, representing 79% YOY growth.
Management highlighted the return of Asia travel retail organic sales growth as the reason for the rebound. Furthermore, they projected accelerating momentum in organic sales growth in Q4 FY2024. Due to the momentum, the company expects the second half of 2024 to be an inflection point for operating profits.
Estée Lauder is on the cusp of revenue and earnings reacceleration. Yet, EL stock is 65% below its December 2021 highs. The turnaround is taking shape, and the stock is a bargain at these levels.
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.
