If you had to point to any one attribute that makes very large capitalization firms attractive as an investment vehicle, it would be predictability. Big, established businesses are predictable in terms of earnings and revenue growth. At the same time, they lack maximum upside potential. So, the next best thing in that regard may be future blue-chip stocks.
What do I mean by that term? Simply, these are success entities occupying the mid-cap realm; basically, companies that feature a value of $2 billion to just under $10 billion. Generally speaking, the threshold to be considered a blue chip is a market cap of $10 billion. So, it makes sense that enterprises poised to hit this benchmark are enticing.
With future blue-chip stocks, you have a strong bout of predictability on your side. At the same time, there’s also more growth potential. In other words, investors are bidding up shares to attain the title of the blue-chip domain.
That’s a powerful incentive and provides this unique investment class a little extra oomph for not much more risk absorption. With that, below are three future blue-chip stocks to consider.
Wyndham Hotels & Resorts (WH)
If the travel prioritization trend has anything to say, Wyndham Hotels & Resorts (NYSE:WH) could end up becoming one of the future blue-chip stocks. Right now, the company sits behind the biggest names in the industry like Hilton (NYSE:HLT). However, with its vast portfolio of brands covering a range of income levels, Wyndham can become a fan favorite.
Financially, the print supports the company’s push to rise up the lodging sector’s ranks. In the past four quarters, Wyndham posted an average earnings per share of 98.3 cents. This edged past analysts’ expectations calling for 95.3 cents. Overall, the average earnings surprise during the aforementioned period was 3.03%.
In the trailing 12 months (TTM), the hotelier generated EPS of $2.83 on sales of $1.38 billion. For fiscal 2024, experts believe that the bottom line could expand by nearly 6% to earnings of $4.25 per share. Also, revenue could move up 3.6% to $1.45 billion. Combined with a forward dividend yield of 2%, WH ranks among the enticing candidates for future blue-chip stocks.
Stride (LRN)
Based in Reston, Virginia, Stride (NYSE:LRN) falls under the education and training services industry. Per its public profile, the company bills itself as a technology-based education service firm. It offers an integrated package of systems, services, products and professional expertise to support virtual or blended public schools. With other nations aggressively investing in their academic infrastructure, the U.S. needs to step up.
Fundamentally, Stride could offer a viable solution, making it an attractive candidate for future blue-chip stocks. What’s even more encouraging is the underlying financial performance. In the past four quarters, the company posted an average EPS of almost $1.07. This figure easily beat out covering experts’ estimate of 81.5 cents. The earnings surprise came out to 44.3%.
In the TTM period, EPS landed at $4.27 on sales of $1.99 billion. For fiscal 2024, analysts anticipate that the bottom line could pop 52.5% to earnings of $4.53 per share. On the top line, revenue could jump 10.6% to $2.03 billion. With the critical need tied into the business, LRN ranks among the top future blue-chip stocks to buy.
Matador Resources (MTDR)
As a mid-cap hydrocarbon energy firm, Matador Resources (NYSE:MTDR) offers a sizable footprint. Headquartered in Dallas, Texas, Matador falls under the oil and gas exploration and production segment, otherwise known as upstream. This component of the fossil-fuel value chain could see significantly boosted demand due to geopolitics. Tensions in the Middle East and Eastern Europe could see global oil supply chains disrupted.
Cynically, that may help boost the bottom line for Matador. Plus, on the domestic front, Donald Trump and the Republicans look set for an easy road to the White House. That should help boost interest in MTDR stock. On the financial side, the company has generated an average EPS of $1.75 in the past four quarters. That beats out the estimate calling for $1.56.
During the TTM period, Matador posted EPS of $7.30 on revenue of $2.83 billion. For fiscal 2024, analysts are projecting EPS to hit $7.81. If so, that would imply a growth rate of 15.3%. On the top line, sales could reach $3.49 billion, up 24.4%. It’s one of the enticing future blue-chip stocks to consider.
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.
