Blue-chip stocks are known for their stability, but recent investor caution suggests that even these giants aren’t immune to scrutiny.
Following a rollicking start to the year, the stock market is consolidating. Wall Street is on the fence over where the market could head next, with equally compelling arguments on both sides. Adding to the market uncertainty, it’s particularly annoying that blue-chips haven’t been spared either.
With concerns over bloated valuations and sector-specific headwinds, some investors have trimmed their exposure to blue-chip stocks. However, given the current investing environment, I wouldn’t want to jump the gun on blue chips so quickly.
In fact, the current lull presents an excellent opportunity to load up on some of the best blue-chip stocks. The three discussed in the piece stand out the most, offering superb upside potential for those willing to stomach the near-term volatility.
Walt Disney (DIS)
Entertainment giant Walt Disney (NYSE:DIS) has been a laggard in the stock market this year. Multiple top-line misses and lukewarm growth in its streaming division weighed down DIS stock significantly. However, following a relatively strong Q2 showing and multiple growth catalysts ahead, DIS stock seems interesting again.
The biggest win for the business of late and its shareholders was Disney+ reporting profitability for the first time in Q2. Also, direct-to-consumer sales jumped 13% year-over-year (YOY), with Disney’s streaming division expected to be fully profitable by the end of Q4.
Additionally, ESPN’s streaming service is set to launch next year, and it promises to be a game-changer. Sports channels pull in massive numbers, and this new venture could be a substantial tailwind for the company. Also, Disney is wisely reinvesting in its parks division, committing a whopping $60 billion over the next 10 years, potentially adding billions in incremental sales.
Medtronic (MDT)
Considering the current market volatility, betting on dividend-paying stocks with growth potential is the best course of action. Medtronic (NYSE:MDT) fits this profile perfectly, with an excellent 3.5% yield, while having paid a growing dividend for the past 10 consecutive years.
The firm is a global leader in medical technology, offering cutting-edge solutions across various healthcare segments. Its overbearing market presence and relentless push for innovation make it one of the most compelling blue-chips to scoop up on the dip.
Moreover, Medtronic operates a stable business marked by consistent bottom-line expansion. Additionally, with a superb track record of posting growing net profits, its free-cash-flow base stands at an amazing $5.45 billion. Recent results have continued its impressive track record, comfortably blowing past top-and-bottom-line estimates over the past six quarters. Also, despite recent shortfalls in the cardiovascular division, Medtronic has balanced these with gains in other areas.
PDD Holdings (PDD)
PDD Holdings (NASDAQ:PDD)is a true juggernaut in the Chinese digital economy, and it continues to grow at a remarkable pace.
Fueled by its dynamic online marketing initiatives, focus on high-margin products, and transaction services, the company has grown sales by over 105% on a YOY basis. Over the past five consecutive quarters, PDD has beaten estimates across both lines. Its Q1 results, in particular, were the best of the list, with a whopping 125% increase in sales to $12 billion, beating estimates by $1.41 billion. Even more impressive was its bottom-line showing, supported by a massive 275% and 246% increase in operating profit and net income.
Given these robust results, Wall Street analysts assign a “strong buy” rating to the stock, forecasting a promising 64% potential upside in its price. Hence, with such powerful fundamentals and a forward-thinking strategy, PDD is positioned to continue growing in a competitive sector.
On the date of publication, Muslim Farooque 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
