The stock market is sizzling right now. The U.S. economy remains strong, and inflation has moderated to a significant degree. This has the Federal Reserve primed to cut interest rates this year, which could further boost investor sentiment. Throw in powerful innovations in fields such as semiconductors and artificial intelligence technology, and the market is enjoying a powerful bull run.
This, however, has led some analysts to warn that a bubble may be forming. Some leading momentum stocks now have lofty valuations, and the market could see a swift correction if anything goes wrong with the prevailing narrative. Fortunately, there are still some great blue-chip stocks that investors can buy with confidence in 2024. Whether or not the current rally holds, these long-term, blue-chip winners are set to keep delivering steady gains for many years to come.
These are 10 of the best blue-chip stocks to buy for 2024:
— Brown-Forman Corp. (ticker: BF.A, BF.B)
— Realty Income Corp. (O)
— Unilever PLC (UL)
— Nestle SA (OTC: NSRGY)
— Estee Lauder Cos. Inc. (EL)
— Thermo Fisher Scientific Inc. (TMO)
— Texas Instruments Inc. (TXN)
— Emerson Electric Co. (EMR)
— American Water Works Co. Inc. (AWK)
— Visa Inc. (V)
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Brown-Forman Corp. (ticker: BF.A, BF.B)
Brown-Forman is one of America’s leading spirits companies. Controlled by the Brown family for generations, the company was one of the few alcoholic beverage producers that survived the U.S. prohibition period. The company would take over operations of the Jack Daniel’s whiskey brand in 1956 and has grown it tremendously since then, making it a prominent global whiskey brand. In addition, Brown-Forman made a shrewd acquisition, picking up Herradura tequila for $776 million in 2008 just before the tequila boom really took off. The firm is now targeting growth through Jack Daniel’s line extensions, more upscale brands like Woodford Reserve, and ready-to-drink products such as canned Jack and Coke.
Despite strong historical growth in a recession-proof industry, Brown-Forman shares have been roughly flat since 2018. COVID-19 disrupted on-premise alcohol consumption, and margins and foreign tariffs have impacted results. But with shares at their lowest valuation ratios in a decade, Brown-Forman stock is a steal today.
Realty Income Corp. (O)
Realty Income is a triple-net real estate investment trust, or REIT. Triple-net leases are unique because the tenant, rather than the landlord, is responsible for certain operating costs such as taxes and maintenance. Realty Income was one of the first major companies to institute a monthly dividend policy, and the REIT also has increased its dividend annually for more than 25 years in a row. This has made this blue-chip real estate firm a leading choice for income investors.
The company’s long track record demonstrates that it can hold its own during economic downturns, including the 2008 financial crisis and the pandemic. The company also wisely divested the office portion of its holdings several years ago before the bottom fell out of that market. Despite smart capital allocation decisions, Realty Income shares are down more than 10% over the past year amid higher interest rates and a cloudy outlook for commercial real estate. That makes for a bargain entry point, and a chance to snag up a stock paying a 5.9% dividend.
Unilever PLC (UL)
Headquartered in London, Unilever is a leading global consumer health and beauty company. It sells a wide array of products covering personal care, fabric care and cleaning products, skin products, deodorant and so on. In the past, Unilever was also heavily involved in food and beverage products as well, but it is now refocusing its operations. In 2022, it sold off its Lipton tea business to private equity.
In March, Unilever announced that it would be divesting its ice cream business, namely Ben & Jerry’s. While Ben & Jerry’s is a powerful brand, it has caused Unilever some headaches due to the leadership’s outspoken political positions, such as its recent activism about the conflict in Palestine. By unloading the ice cream division, Unilever can improve its focus on its consumer products business while removing the social pressures that come with political activism. After years of stagnant stock price performance, UL stock is now on offer for 15 times forward earnings while offering a solid 3.8% dividend yield.
Nestle SA (OTC: NSRGY)
Nestle is another excellent choice in the blue-chip consumer staples stock space. The confectionary, packaged food and pet foods maker is the world’s largest publicly traded food company and one of Switzerland’s most important firms. Nestle has been in business for 158 years and generates more than 90 billion Swiss francs ($100 billion) in annualized revenues. With brands like Nestle, Nescafe, Purina and Kit Kat, Nestle has a business that is nearly impervious to near-term changes in the economy or consumer tastes and preferences.
Blue-chip investors have long counted on Nestle — and with good reason. The company increases its dividend regularly. And its rock-solid brands have stood the test of time, delivering steady cash flows regardless of economic conditions. Food stocks have underperformed in recent years. When the economy slows down, however, Nestle should see its valuation multiples rise. This makes it a great entry point to buy Nestle shares at a discount today.
[15 Best Dividend Stocks to Buy for 2024]
Estee Lauder Cos. Inc. (EL)
Estee Lauder is one of the world’s leading cosmetic care companies. Cosmetics thrived a few years ago as people spent heavily on beauty products as the global economy reopened. That boom has turned into a bust as demand has waned and retailers have ended up with excess inventories. The downturn has been particularly dramatic in the Asian market as countries such as China have seen their economies remain in a tailspin for several years now.
Investors have overreacted to these developments, with EL shares plunging from a high of $370 to as low as $102 last year. The stock is subsequently up nearly 40% from those lows. While the full recovery will take time, the longer-term demand for cosmetics should continue to grow thanks to the rise of social media and increasing wealth in emerging market economies.
Thermo Fisher Scientific Inc. (TMO)
Thermo Fisher Scientific is a scientific equipment company focused on the health care space. Products include analytical tools, life sciences, lab products and services, and specialty diagnostic products. The company’s profits dipped in 2023 as temporary revenues related to COVID-19 vaccines and testing started to disappear.
However, the longer-term picture is bright. The global pharmaceutical and biotech industries should enjoy outstanding growth over the next decade. Globally, populations are rapidly aging, and this should lead to far more spending on potential breakthrough treatments and cures in fields such as oncology. Innovations like gene editing and synthetic biology will add further momentum. TMO stock has underperformed the market since 2021, but it should be set for a rapid recovery as its earnings return to growth going forward.
Texas Instruments Inc. (TXN)
Texas Instruments is the world’s largest analog semiconductor company by market share. The firm was founded in 1930 and has created seismic equipment, home computers, graphing calculators and digital TV projectors, among other goods. Nowadays, it is mostly known for its analog semiconductor operations. Analog chips are vital because they can take real-world information such as temperature, sound and physical movements and translate them into digital data that machines and AI applications can interpret.
Analog chips have an immense number of use cases, several of which should enjoy tremendous growth over the next decade. As vehicles become increasingly smart and electrified, they need exponentially more semiconductors to make it all work. In addition to the auto market, Texas Instruments should see growth in areas like smart devices and edge AI use cases. Texas Instruments is highly profitable, grows cash flows consistently and pays a growing dividend, making it a great blue-chip technology holding.
Emerson Electric Co. (EMR)
Emerson Electric is an industrial company that makes electrical components and equipment. In more recent years, Emerson has invested in software and process automation to enable factory logistics and management. Naturally, software tends to be a higher-margin business than industrial equipment. Thus, as Emerson continues to reposition its operations toward software and automation, the firm’s profit margins and attractiveness will rise.
The rise of AI has heightened awareness of the need to automate processes and increase efficiency in an industrial setting. While Emerson might not jump off the page as an AI play, in 2023, it introduced its Revamp system, which it claims can automate up to 70% of system configuration, reduce errors and manual conversion work, and slash capital costs by up to 15% for certain industrial functions. Plus, EMR’s valuation stands out. Shares go for just 21 times forward earnings and the company is a Dividend Aristocrat, making it a great growth and income blue-chip holding.
American Water Works Co. Inc. (AWK)
With a market capitalization of more than $20 billion, American Water Works is one of the largest publicly traded North American water utilities. In recent years, some investors have soured on utilities as an asset class. In his most recent annual letter, for example, Warren Buffett expressed frustration with the increasingly difficult regulatory environment for American utility firms. Things such as mounting liabilities related to forest fires have added uncertainty.
However, water is arguably the best-insulated portion of the industry. It doesn’t have to worry about carbon emissions in the same way electric generation firms do, nor does it have the same sort of natural disaster exposure. And water demand is incredibly stable; regardless of technological change, it’s hard to see water use materially diminishing. Amid higher interest rates and the underperformance of utility stocks, American Water Works has lost a third of its value since its 2021 peak. This has pushed shares down to an agreeable 23 times forward earnings.
Visa Inc. (V)
The credit card giants are stronger than ever. Admittedly, it was a challenging few years for Visa and Mastercard Inc. (MA). The pandemic caused international travel to shut down for a time, which greatly hampered results, as credit card operators earn much higher fees on cross-border payments, which involve currency exchange. In addition, there was a great deal of talk about disruption to the industry. Supposedly, some combination of mobile wallets, fintech competition and cryptocurrency could disrupt the existing paradigm.
Visa, however, has weathered this storm beautifully. The company is back to delivering record revenues and earnings per share. In fact, analysts are looking for about $36 billion of revenues in fiscal year 2024, which is way up from the $23 billion recorded in fiscal year 2019. If anything, the lasting impact of the pandemic appears to have been to drive contactless card-based paymentstill solutions in emerging market economies where cash still had a major payments market share, thus helping further build Visa’s network. With analysts forecasting double-digit annualized earnings growth for the foreseeable future, Visa is a blue-chip stock investors can count on for the long haul.
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10 Best Blue-Chip Stocks to Buy for 2024 originally appeared on usnews.com
Update 03/22/24: This story was published at an earlier date and has been updated with new information.
