The stock market seems unstoppable right now. The major market indexes are hitting new highs almost every month. Breakthroughs in fields such as semiconductors and artificial intelligence seem set to pave the way for rapid increases in efficiency and corporate profitability. And with inflation starting to moderate, the Federal Reserve may be able to start meaningfully cutting interest rates within the next couple of quarters.
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However, things can change on a dime. Recall how the markets plunged both in early 2020 and once again in 2022. If anything is guaranteed in the stock market, it’s that there will be stomach-churning volatility at times along the way. A solution for this is to invest in blue-chip stocks. While equities are unpredictable, companies with long track records of success tend to be more stable and more able to weather the various storms that come up along the way. The following companies are both tremendous long-term picks, and also offer considerable value in today’s otherwise high-priced market.
These are 10 of the best blue-chip stocks to buy today:
— Visa Inc. (ticker: V)
— Estee Lauder Cos. Inc. (EL)
— Brown-Forman Corp. (BF.A, BF.B)
— Hormel Foods Corp. (HRL)
— Intel Corp. (INTC)
— Toronto Dominion Bank (TD)
— United Parcel Service Inc. (UPS)
— Hershey Co. (HSY)
— Johnson & Johnson (JNJ)
— Realty Income Corp. (O)
Visa Inc. (V)
A couple of years ago, the credit card giants were on shaky footing. The pandemic shut down international travel, greatly limiting the most profitable revenue stream for these companies: cross-border payments. On top of that, the rise of financial technology (fintech), mobile wallets and cryptocurrency-based payments systems appeared to be a major threat to credit cards. Fast forward to 2024, however, and international travel is stronger than ever. Meanwhile, much of the fintech and cryptocurrency competition failed to get off the ground.
Visa, in particular, is firing on all cylinders. Analysts are projecting that it will bring in $36 billion in revenue this fiscal year, which is way up from the $23 billion recorded in fiscal 2019. And while the pandemic was a short-term drag on the company’s results, it counterintuitively ended up helping the firm in the bigger picture. That’s because the crisis drove much faster adoption of contactless card payments systems while speeding the decline of cash-based transactions. With analysts forecasting double-digit annualized earnings growth for the foreseeable future, Visa is a blue-chip stock that investors can count on for the long haul.
Estee Lauder Cos. Inc. (EL)
Estee Lauder is one of the world’s leading cosmetic care companies. The company enjoyed a sales boom in 2021 as the economy reopened and people wanted to look their best once the lockdowns ended. However, the sales boom fizzled out faster than expected, causing retailers to have far too much inventory. The downturn has been particularly steep in the key Chinese market.
But this is hardly a permanent condition, and inventory and sales levels will normalize over time. Meanwhile, EL stock has collapsed from a high of $370 to less than $115 today as investors have dramatically overreacted to the near-term earnings slump. In the bigger picture, cosmetics demand will continue to soar thanks to social media, along with rising wealth and consumption levels in emerging markets such as India and Latin America. All this makes Estee Lauder a great blue-chip stock to buy at a fat discount today.
Brown-Forman Corp. (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.
Brown-Forman shares have risen more than fifty-fold over the past 40 years. Despite the tremendous track record however, investors have soured on the company more recently, with the stock losing 20% over the past five years. Brown-Forman has seen uneven results since the pandemic, but these near-term operational issues have created a tremendous buying opportunity in the storied stock.
Hormel Foods Corp. (HRL)
Hormel Foods is a packaged foods company focused on protein-based products. The company is an unheralded growth and income champion. In fact, it is one of the rare Dividend Kings, meaning that it has raised its dividend for at least 50 consecutive years. The company has built that enviable track record thanks to its strong brands and superb management team. Hormel also benefits from the fact that a charitable trust controls half of the company, insulating it from meddling activist investors while allowing management to grow the business with a long time horizon. Hormel used to be known for its Spam canned pork product, but it has evolved its portfolio to also include healthier options such as naturally raised and organic meats, nuts and nut butters, guacamole and Mexican salsas.
HRL stock has had a dramatic drawdown over the past two years due to a pandemic-linked drop in profit margins. But analysts expect the company to recover in 2025 and meanwhile this Dividend King’s yield sits at 2%.
Intel Corp. (INTC)
It’s been a rough 2024 for Intel. Shares of the semiconductor giant are down more than 35% year to date while the VanEck Semiconductor ETF (SMH) is up more than 50% over the same time period. Intel is dealing with a couple of problems. One, its core computer chip market turned down sharply in 2023 as the work- and study-at-home era ended and personal computing sales plunged. More broadly, Intel has fallen behind rivals such as Nvidia Corp. (NVDA) in developing AI-enabled chips for next-generation data centers.
However, investors shouldn’t give up on this blue-chip tech giant so quickly. Intel spends more than $16 billion annually on research and development, giving it plenty of opportunity to catch up in the technology arms race. Meanwhile, with assistance from the Biden Administration’s CHIPS Act, which subsidizes domestic semiconductor factories, Intel is investing heavily in cutting-edge manufacturing facilities which should further help it level the playing field compared to its rivals.
[15 Best Dividend Stocks to Buy for 2024]
Toronto Dominion Bank (TD)
Toronto Dominion Bank is one of Canada’s five large banks. In addition to its dominant retail banking business, Toronto Dominion has substantial operations in investment banking along with an increasing presence in the United States market. It also owns a sizable chunk of Charles Schwab Corp. (SCHW), giving it upside as that brokerage continues to recover from last year’s interest rates and deposit flight jitters.
TD stock is now selling at its lowest price since late 2020. Investors are worried about a slowdown in the Canadian market and the possibility that Canada’s booming housing market may turn to a bust. These are valid concerns, but Canada’s banking system has proven to be incredibly resilient, and the government offers strong backing to support the residential mortgage market. This makes TD stock a great dip-buying opportunity now, and the dividend yield is also a generous 5.4%.
United Parcel Service Inc. (UPS)
With approximately 500,000 employees, 100,000 vehicles, and more than 500 airplanes, UPS is a truly gigantic enterprise devoted to the delivery of small parcels. Along with FedEx Corp. (FDX) and DHL Express, these three enjoy massive market share and a generally stable competitive market. UPS enjoys industry-leading profit margins in significant part due to its unrivaled scale and its robust infrastructure investments.
While UPS’ long-term outlook remains favorable, traders are worried right now. Shares are off more than 20% over the past 12 months as e-commerce sales growth has slowed down with the end of the stay-at-home era. In addition, competition from Amazon.com Inc. (AMZN) in the last-mile delivery market has depressed investor sentiment. These factors have pushed UPS stock down to less than 17 times forward earnings while offering an appealing 4.7% dividend yield.
Hershey Co. (HSY)
Hershey is one of the world’s largest chocolate and confectionery companies. The consumer staples firm has also made an increasing push into the snack food market in recent years. The firm’s appeal comes from its powerful brands. People have a strong association with their favorite brands of sweets and don’t often switch away from a preferred flavor profile. Chocolate is also an affordable luxury, something that people can eat frequently even during hard economic times. This positions Hershey well for whatever may lie ahead once the current economic expansion ends.
Hershey stock hit new all-time highs in 2023 as it benefited from solid price increases during the recent inflationary period. However, the stock has now pulled back more than 25% over the past 12 months, pushing shares down to a much more reasonable entry point. In particular, the stock is back under 20 times forward earnings. Human nature doesn’t change very quickly; sweet treats will always be in demand, and Hershey’s tremendous branding and operating scale will keep it in a leading position for decades to come.
Johnson & Johnson (JNJ)
Founded in 1886, Johnson & Johnson has proven to be one of the bluest of blue-chip stocks available in America. The company has introduced a vast number of leading pharmaceutical products, medical devices and consumer wellness products over the decades. The company’s broad internal diversification and vast array of different products has insulated it from economic shocks or changing market trends.
Johnson & Johnson has missed out on the GLP-1 drug boom — pharmaceutical companies that have exposure to the diabetes management and weight loss space are booming and everything else is underperforming right now. J&J also recently spun off its consumer products unit as a separate company, and the market is still sorting things out on that front. These factors have pushed JNJ stock down significantly over the past couple of years, offering up this health care leader at just 14 times forward earnings.
Realty Income Corp. (O)
Real estate can be a volatile market. And that’s especially true in the current macroeconomic environment where high interest rates and abrupt changes in the commercial real estate market are wreaking havoc on many real estate investment trusts (REITs). Fortunately for long-term investors, there is still a great choice in the REIT sector: Realty Income. The triple-net lease REIT has shrewdly navigated the changing tides while remaining a dependable income investment. The company spun off its office properties years ago, helping it avoid the downturn that has since hit that sector. Meanwhile, Realty Income has moved into entertainment properties that are performing better in the current consumer environment.
Realty Income has increased its dividend, which is paid monthly, for more than 25 years in a row, making it one of the few Dividend Aristocrats in the REIT category.
[See: 9 Dividend Aristocrats to Buy Now.]
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10 Best Blue-Chip Stocks to Buy for 2024 originally appeared on usnews.com
Update 06/25/24: This story was previously published at an earlier date and has been updated with new information.
