While the soaring equity indices suggest a resounding economic recovery, those living in the real world face a different paradigm. With myriad headwinds such as elevated inflation and high borrowing costs imposing significant pain on consumers, investors may feel more comfortable considering blue-chip stocks.
Like any team sports competition, the investment game features an ebb and flow. A successful market participant responds to these shifts by making prudent decisions with their holdings. One of the wisest ideas an investor can make is to consider blue-chip stocks; that is, enterprises that are well-recognized and feature robust and predictable businesses.
They’re not the most exciting ideas, that’s for sure. Instead, think of these corporate giants as a massive pickup truck. Unlike a more fragile sports car, you’re not going to be swerving to avoid every little pothole. Instead, you’re just going to run right over these nuisances.
That’s the privilege behind blue-chip stocks. And with that, below are enticing ideas to consider.
Church & Dwight (CHD)
One of the top names in the consumer defensive sector, Church & Dwight (NYSE:CHD) ranks among the best blue-chip stocks for its underlying utility. Offering a wide range of household and personal products, Church & Dwight – which is best known for its Arm & Hammer brand – benefits from a permanently relevant narrative. No matter what’s going on with the economy, people will need the essentials like oral care products.
Thanks to its predictable business, CHD is relatively easy to trust. Between the second quarter of 2023 to Q1 2024, the company’s average earnings per share reached roughly 82 cents. When stacked against analysts’ expectations, Church & Dwight saw an average earnings surprise of 8.5%. That’s not bad at all.
During the trailing 12 months (TTM), the company posted net income of $780.1 million or EPS of $3.16. Revenue during this time hit $5.94 billion. For fiscal 2024, covering experts anticipate EPS to rise 9.15% year-over-year to hit $3.46. On the top line, the household goods giant could ring up $6.13 billion in sales, up 4.5% YOY.
Home Depot (HD)
A company that really needs no introduction, Home Depot (NYSE:HD) specializes in the home-improvement retailer business. What makes the company so intriguing is that stuff goes wrong all the time. Call it Murphy’s law or some other phenomenon of misfortune. When it rains, it pours. And no, these things occur whether the market is in a bull or bear cycle.
Granted, Home Depot isn’t the most exciting idea out there. However, because stuff happens all the time, the retailer serves the public in its moment of need. As a result, it enjoys consistency. During the past four quarters, its average EPS came in around $3.73. This performance translated to an average earnings surprise of 2.15%.
In the TTM period, Home Depot posted net income of $14.87 billion or earnings of $14.91 per share. Revenue reached $151.83 billion. For the current fiscal year, analysts are looking for modest growth of 1.2% in EPS to hit $15.29. On the top line, sales may land at $153.96 billion, up around 1%. Again, while not exciting, HD is one of the blue-chip stocks that should keep your portfolio pointed in the right direction.
Walmart (WMT)
Another massive retailer, Walmart (NYSE:WMT) falls under the big-box variety. Featuring a one-stop-shop solution, one of the company’s top benefits as it relates to blue-chip stocks to buy is the underlying everyday low pricing. By focusing on volume, Walmart has taken a massive share of the consumer market (both discretionary and essential).
While WMT may be a predictable idea for blue-chip stocks, it’s one of the ideas that you can depend on. During the past four quarters, the company’s average EPS reached 54.5 cents. Against analysts’ expectations, the performance translated to an earnings surprise of 8.28%.
During the TTM period, the big-box retailer posted net income of $18.94 billion or earnings of $2.33 per share. Revenue during this cycle hit $657.33 billion. Its latest quarterly revenue growth rate (YOY) comes in at 6%.
For the current fiscal year, experts seeking EPS of $2.43, up almost 20% YOY. Revenue may reach $676.64 billion, a 13.7% increase from the prior year’s tally of $594.85 billion.
McDonald’s (MCD)
One of the iconic corporate giants of the U.S., McDonald’s (NYSE:MCD) represents one of the top-tier blue-chip stocks to buy. Over the years, the Golden Arches has faced challenges, from rising competitors in the fast-casual space to concerns regarding the nutritional value of its offerings. However, the company benefits from massive brand power and awareness. It’s also demonstrating a knack for reinventing itself to account for shifting consumer behaviors.
During the past four quarters, McDonald’s posted an average EPS of almost $2.96. In all fairness, it missed analysts’ projections for Q1 2024 of earnings of $2.72 per share by two pennies. However, even with the miss, the company’s average earnings surprise during the aforementioned period landed at just under 6%. That demonstrates the enterprise’s consistency.
In the TTM period, the Golden Arches posted net income of $8.6 billion or EPS of $11.76. Revenue reached $25.76 billion, with its latest quarterly revenue growth rate hitting 4.6%. For fiscal 2024, EPS may rise 9.3% to reach $12.19. On the top line, sales could come in at $26.62 billion, up a stout 11.8% from the prior year.
Visa (V)
Financial services giant Visa (NYSE:V) – which specializes in card payment solutions – presents a tricky case for blue-chip stocks to buy. It certainly represents one of the top-tier corporate institutions. However, questions exist about the viability of the sector. In particular, consumers (especially younger ones) are turning to credit cards to make ends meet.
Combined with rising delinquencies, this dynamic presents challenges. However, if you wanted to look at the situation as a glass half-full, you could say that piling on the debt reflects broader confidence in the American system. Plus, the labor market has generally been robust, perhaps indicating that the nation could work through its troubles.
So far, the financials appear compelling. During the past four quarters, average EPS landed at $2.30. This performance translated to an earnings surprise of 2.93%. For fiscal 2024, experts are projecting EPS growth of 24.4% to reach $9.95. On the top line, sales could expand by almost 21% YOY to hit $35.94 billion.
Even better, Visa’s growth projections exceed that of rivals Mastercard (NYSE:MA) and American Express (NYSE:AXP).
IBM (IBM)
One of the more boring and uninspiring ideas for blue-chip stocks, legacy tech giant IBM (NYSE:IBM) nevertheless deserves some attention. To be sure, the company has been overshadowed by its younger counterparts. However, “Big Blue” is no slouch. It still offers tremendous acumen in artificial intelligence, deep learning, cybersecurity and even the blockchain. There may be underappreciated value here.
Further, after going through a volatile period in late April, it appears that IBM stock has stabilized. That could be good news particularly because of its passive income. Right now, the company offers a forward annual dividend yield of 3.93%. As well, IBM posted an average EPS of $2.44 during the past four quarters. In terms of earnings surprise, this performance resulted in an average of 4.9%.
Net income during the TTM period reached $8.15 billion or earnings of $8.82 per share. Revenue came in at $62.07 billion. For fiscal 2024, analysts anticipate EPS of $9.94. If so, that would imply 3.3% growth YOY. On the top line, IBM may ring up $63.03 billion, up 1.9% from last year.
Shell (SHEL)
One of the world’s biggest hydrocarbon players, Shell (NYSE:SHEL) ranks among the supermajors. These integrated oil and gas stalwarts cover multiple segments of the energy value chain. To be sure, the hydrocarbon sector is a little bit tricky to decipher. With prices slipping, this dynamic implies that there is reduced global demand for fossil fuels.
Part of the reason for the deflated view centers on Ukraine. Its defense forces have begun attacking invading Russia’s oil refineries. In turn, the Russians must sell their crude oil at deep discounts to account for the loss of revenue for their refined products. That might not be great for SHEL stock. However, geopolitical dynamics can always shift unpredictably.
One area to consider is the Middle East. Tensions have cooled but this inflamed region could light up again. If so, global oil supplies may come under threat, which could be cynically positive for SHEL.
Notably, analysts are looking for fiscal 2024 revenue to reach $346.79 billion, up 9.5% YOY. Further, the high-side target comes in at $443.5 billion, a massive gap up. Watch this space as SHEL could be one of the best blue-chip stocks.
On the date of publication, Josh Enomoto 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.
