Stability and resiliency are the hallmarks of blue-chip stocks, standing tall among the tides of market turbulence, unlike their high-risk, high-burn counterparts. While some Blue-chips may lag, others shine with enduring brilliance. For investors seeking a steady ship during choppy market waters, here are some compelling choices.
Chipotle (CMG)
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Chipotle (NYSE:CMG) has built a niche as the healthier fast-food alternative, a strategic branding move that paid handsome dividends. In Q4 2023, the company saw a soaring 15.4% in revenue and an even higher 27.3% increase in diluted earnings per share, outperforming the full-year revenue rise of 14.3%. Chipotle also carved out a remarkable 11.3% net profit margin, not to mention the addition of 121 new restaurants, 110 of which boast a Chipotlane, proving to be a growth catalyst. Over the past year, the equity has climbed by 44%, and in the past five years, it has surged by 327%. Currently, the shares trade at a 47 forward P/E ratio.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) stands as a pivotal stock for the S&P 500 and the Nasdaq 100, delivering sterling returns for long-term investors. With solid growth in cloud computing, social media, advertising, artificial intelligence, and gaming, Microsoft posted an impressive 18% year-over-year revenue growth in Q2 FY24, fueled by a spectacular 24% surge in cloud revenue. The tech titan has been inking new deals, infusing artificial intelligence into its tech stack to streamline business operations, exemplified by the AI assistant, Copilot, which has its own Super Bowl ad, underscoring Microsoft’s commitment to this advanced tech product.
Amazon (AMZN)
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Amazon (NASDAQ:AMZN) continues to exhibit robust growth, with a 14% year-over-year revenue rise in Q4 2023. Notably, Amazon Web Services saw a commendable 13% year-over-year surge. The company witnessed tremendous traction in international markets and broke all records in the holiday season, thanks to its generative AI capabilities, particularly Bedrock, designed to streamline AI application scaling. With a whopping 70% gain over the past year and a 115% surge in the past five years, Amazon remains a sturdy bet for long-term investors, especially amid its untapped potential in international markets, along with its broad base across verticals.
Procter & Gamble (PG)
Steady Performers: Procter & Gamble, Mastercard, Walmart, and IBM
The venerable conglomerate Procter & Gamble (NYSE:PG) has long been a staple in the portfolios of conservative investors. The company’s stock has offered stability rather than breakneck growth, with a modest 14% gain over the past year and a respectable 60% increase over the past five years. However, where it shines is in dividend payouts. An impressive track record of 133 years of consecutive dividends, including 67 years of increases, makes PG stock a standout choice for income-oriented investors. The current 2.40% dividend yield further sweetens the deal, making Procter & Gamble a reliable choice for those seeking stability and income.
Mastercard: Beating the Competition
Meanwhile, Mastercard (NYSE:MA) has been a shining star in the financial sector, outperforming its rival Visa (NYSE:V). With a solid 25% gain over the past year and an impressive 106% increase over the past five years, Mastercard has certainly captured the attention of growth-oriented investors. The company’s recent financial results have been impressive, with a 13% year-over-year revenue growth in the fourth quarter of 2023 and a net income of $2.8 billion, representing an 11% year-over-year growth rate. CEO Michael Miebach pointed to healthy consumer spending and robust growth in cross-border volume as key drivers of the company’s stellar performance. Although Mastercard’s dividend yield is a modest 0.60%, its remarkable history of dividend growth should not be overlooked. Starting 2024 with a 15.8% year-over-year dividend increase, Mastercard has demonstrated a commitment to rewarding its shareholders for the long haul.
Walmart: Embracing Change for Growth
Retail giant Walmart (NYSE:WMT) has been making strategic moves to tap into new growth opportunities. The company’s e-commerce sales surged by 15% year-over-year in the third quarter of 2023, while overall sales increased by 5.2% year-over-year, showcasing the company’s adaptability in the fast-evolving retail landscape. Walmart’s e-commerce success has been particularly pronounced in domestic markets, while international markets have shown stronger growth in retail store revenue. Furthermore, the company’s global advertising revenue saw a remarkable 20% year-over-year jump, signaling a potential avenue for higher margins and growth. With its low beta of 0.49, Walmart offers investors a less volatile alternative to the broader market, a feature that can be particularly appealing during periods of economic uncertainty. As evidenced by its impressive 69% gain over the past five years, Walmart has been able to deliver growth even in challenging economic environments.
IBM: A Beacon of Stability and Innovation
IBM’s Renaissance: An Investor’s Guide
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IBM (NYSE: IBM) is making a comeback after years of stagnation, beckoning investors with a 37% surge in shares and an enticing 3.55% dividend yield.
The Turnaround
In the culmination of 2023, the company witnessed a remarkable 4% year-over-year revenue growth, indicating a transition from its former plateaued state. The burgeoning demand for its hybrid cloud and artificial intelligence offerings has been instrumental in fostering this revival.
Financial Resurgence
Despite the awe-inspiring climb of other AI stocks, IBM boasts a mere 23 P/E ratio, rendering it a lucrative yet undervalued prospect. The company’s forward P/E ratio currently stands at 18.50, emblematic of its latent growth potential. The reinvented company has witnessed a commendable 14% year-over-year net income rise in the final quarter of 2023.
Future Projections
IBM’s sanguine outlook anticipates the attainment of mid-single-digit year-over-year revenue growth in 2024. The firm sets its sights on generating a substantial $12 billion in free cash flow in the same year. While other tech companies may outshine this stock in performance, its stability during economic uncertainty makes it an attractive consideration for investors.
On this date of publication, Marc Guberti held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
