Blue-chip stocks are household names that are likely to deliver long-term gains for patient investors. Furthermore, these corporations are less risky and aren’t as prone to going out of business. Most blue-chip stocks have established large moats for themselves, making it more difficult for competitors to pry market share. They cater to investors who follow the buy-and-hold investment strategy.
However, some blue-chip stocks are mature companies with limited growth prospects. Those companies have their best years behind them and aren’t as likely to reward new investors. When analyzing stocks, it’s important to consider possible future returns instead of leaning on past results.
These three blue-chip stocks have demonstrated the ability to outperform the S&P 500. Also, these corporations shine with growth catalysts that can lead to future gains. Investors should look for companies with rising revenue and net profit margins. So, let’s delve into these three blue-chip stocks that check off those boxes.
American Express (AXP)
American Express (NYSE:AXP) has outperformed the S&P 500 with a 27% year-to-date (YTD) gain. And, shares are up by 87% over the past five years and come with a 1.17% yield. The credit and debit card issuer still trades at an affordable valuation. AXP stock’s P/E ratio is just shy of 20 at current levels.
So, the good times should continue to roll for long-term investors. American Express reported 11% year-over-year (YOY) revenue growth and 34% YOY net income growth in the first quarter. Leadership mentioned that the company is continuing to win over younger generations. More than 60% of new account openings in the quarter came from Millennials and Gen Z consumers.
Further, American Express remains on track to deliver 9% to 11% YOY revenue growth and mid-teens EPS growth beyond 2026. While investors wait for that growth to materialize, they get to enjoy a solid dividend program. American Express hiked its dividend by 17% in 2024. Double-digit dividend growth has become common for shareholders.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) makes most of its revenue from online advertising, and this segment should continue to grow in the years ahead. Many people use Google to find relevant information to the point where Google has become a verb. In addition, consumers regularly watch YouTube videos, racking Alphabet billions of dollars in the process.
Indeed, Alphabet brings many people to its search engines, and its advanced targeting capabilities give advertisers more reasons to stick around. It’s possible for advertisers to show ads based on people’s viewing history, location and other factors.
The tech giant once again dazzled investors with 15% YOY revenue growth in the first quarter. Net income was up by 57% YOY as the company continues to trim costs. While Google and YouTube are the key components of Alphabet’s success, Google Cloud now represents more than 10% of total revenue. Also, artificial intelligence (AI) tailwinds should lead to elevated cloud revenue growth for several quarters, if not years.
Nvidia (NVDA)
AI is innovative technology with an incredible runway. The AI industry has a projected 28.46% compounded annual growth rate from now until 2030. Many corporations are capitalizing on this technology to improve efficiency and strengthen their profit margins. However, few companies are as well positioned as Nvidia (NASDAQ:NVDA) to ride the AI wave.
Indeed, Nvidia’s success hasn’t exactly been a secret. The blue-chip stock is up by 164% YTD and has gained roughly 3,000% over the past five years. The tech giant even briefly became the world’s most valuable publicly traded corporation. And, it’s possible for Nvidia to reclaim that title by the end of the year.
Revenue and net income growth continue to outshine the competition. Nvidia reported 262% YOY revenue growth in Q1 of fiscal year 2025, while net income was up 628% YOY. Profit margins have swelled in recent quarters, and Nvidia wrapped up the first quarter with a 57.1% net profit margin.
On this date of publication, Marc Guberti held long positions in GOOG and NVDA. 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.
