Blue chip stocks refer to well-established companies that have a strong track record of generating strong profits and returns for investors. They also tend to be market leaders in the industries in which they compete and have held dominant positions for many years or even decades.
For these reasons, stocks of profitable blue-chip companies are often the safest investments in times of crisis. market volatility and upheaval. Stock prices do not tend to fall as much as unprofitable and unproven stocks which are considered more speculative investments.
Blue chip stocks also tend to recover faster in periods when markets are rising. That’s why we recommend buying the following seven blue chip stocks now if you have the money to invest.
|HD||Home Depot, Inc.||$273.32|
|BAC||Bank of America Corporation||$31.58|
|BRK-A, BRK-B||Berkshire Hathaway Inc.||404 $708.99, $270|
|F||Ford Motor Company||$11.32|
Blue chip stocks to buy: Apple (AAPL)
The consumer electronics giant, which was the first company in history to reach a market cap of $3 trillion, has not been immune to the market downturn this year. So far in 2022, Apple (NASDAQ:AAPL) the stock fell 26% to now trade at $131.23 a share. But rather than worry about the sell-off, investors should take advantage of the share price decline to buy Apple shares in spades.
Silicon Valley-based Apple remains one of the biggest and best tech companies in the world and it’s rare that investors have a chance at such a favorable entry point with the stock.
Admittedly, Apple faces several overseas challenges which are currently weighing on its share price, including the Covid-19 lockdowns in China which have impacted its manufacturing, and the difficulty in sourcing components and managing supply chains in Asia which threaten production of its popular iPhone, which generated $192 billion in revenue last year. However, innovations and market dominance should help Apple weather the storm. The company has just announced a new iOS 16 operating system and an extension to buy now, pay later.
Snacks and beverage company PepsiCo (NASDAQ:DYNAMISM) is the type of stock that performs well in good and bad economic times.
For example, the Harrison, New York-based company’s stock price is down just 10% year-to-date (YTD) compared to a 29% drop in the Nasdaq index on which it trades. At less than $160 per share, PEP stock is currently trading 12% below its 52-week high of $177.62 per share.
The company productswhich include everything from Pepsi soft drink and Frito Lay chips to Quaker Oatmeal and sports drink Gatorade, are considered grocery essentials by the consumers who love them.
In 2021, PepsiCo generated $79 billion in revenue from its food and beverage products. The company barely missed a beat during the Covid-19 pandemic as sales of its consumer products held up remarkably well. PepsiCo also manages the current inflationary environment through its pricing power, or its ability to raise prices without losing customers.
Additionally, PepsiCo pays a dividend which is currently earning a solid 2.95% or $1.15 per share each quarter. In March this year, PepsiCo announced that it would increase its dividend by 7%, bringing the total increase over the past five years to 43%. The company is also repurchasing $1.5 billion worth of PEP stock this year.
Blue chip stocks to buy: Home Depot (HD)
For a reliable top-notch retailer, check out Home deposit (NYSE:HD). Down 34.5% this year and at $271.82, now might be a good time to grab HD stock at a price greatly reduced price.
In the long run, Home Depot will likely remain a great investment given its dominance in the home improvement and do-it-yourself home repair markets. Even with this year’s decline, Home Depot shares have still gained 74% over the past five years.
While the current market carnage has rattled Home Depot’s share price, it hasn’t hurt the company’s earnings. In mid-May, the Atlanta-based company announced its strongest first quarter sales ever, announcing a net profit of 4.23 billion dollars against 4.15 billion dollars the previous year. That equates to earnings per share of $4.09 compared to $3.86 last year. Analysts had expected the company to report earnings per share (EPS) of $3.68.
Looking ahead, Home Depot expects sales to grow 3% and earnings per share growth to be in the mid-digits, both better than Wall Street expectations.
Credit card companies have not done well over the past two years. The share price of Visa (NYSE:V), one of the three largest credit card issuers in the world, currently sits at $189.94, about 10% below the $210 they were trading at before the global pandemic hit in March 2020. .
Coming out of the pandemic, with travel and dining resuming, many analysts expected the stock V bounce strongly. But, despite some brief rallies, the stock price has struggled to stay above $200 and is down 12% year-to-date.
The downturn in V shares has been the slow return of higher-margin international transactions on its credit cards. As people travel again, they do so domestically, with international travel lagging the recovery.
Visa is also grappling with loss of its activities in Russia after the invasion of Ukraine by that country. Yet despite its current issues, Visa remains a solid investment. Over the past five years, the stock has returned 102% to shareholders. Visa is currently selling 30 times projected earnings this year, which is a low for the company.
Blue chip stocks to buy: Bank of America (BAC)
Among financial stocks, Bank of America (NYSE:BAC) looks extremely cheap at its current price of $31.56 per share. Down 29% over the year amid a broad sell-off in all bank stocks, BAC shares are currently trading at $31.57, 37% below their 12-month high of just over $50. Still, the decline in share price doesn’t take away from the fact that Bank of America, the second-largest lender in the United States, remains a very attractive long-term investment.
Bank of America is expected to perform well going forward as interest on its floating rate loans resets to higher levels following rate hikes by the US Federal Reserve. Additionally, Bank of America improved its deposit base, which now stands at $1 trillion, and invested heavily in technology to improve its online presence and transactions.
Additionally, Bank of America has a large wealth management arm and its trading unit keep making hay out of the current stock market volatility. Overall, BAC stock remains a safe bet for investors.
Berkshire Hathaway (BRK.B)
Considered by many to be the ultimate blue chip action, Berkshire Hathaway (NYSE:BRK-A, BRK-B) has proven time and time again that its stock price can outperform the market in any environment. So far in 2022, BRK.B stock is down just 10% from a benchmark decline of 23% for the S&P 500 index.
The holding company of legendary investor Warren Buffett owns a wide range of businesses which include all of Geico insurance at the dairy queen fast food chain, as well as jewelers, railways and the fruit of the loom underwear company.
Berkshire Hathaway also has a massive stock portfolio which is valued at over $300 billion and mostly includes blue chip companies such as Apple, Bank of America and many more.
Buffett’s careful portfolio construction and buy-and-hold strategy have seen Berkshire Hathaway through many market downturns, from the Black Monday crash of 1987 to the 2000 dot-com bubble burst and crisis. financial year of 2008-09. And each time, BRK.B stock came out stronger on the other side.
Blue chip stocks to buy: Ford (F)
Shares of the legendary automaker Ford (NYSE:F) have been beaten more than most stocks this year. The blue oval saw its share price knocked down 45.5% year-to-date to now trade at $11.32 per share.
While the market slowdown is to blame, Ford has also been hit by ongoing difficulties with global supply chains that have made it difficult to source the parts needed for its vehicles, which in turn has slowed its production.
Still, in the long run, there’s a lot to like about Ford and its stock. The company is pushing hard in electric vehicles and hasn’t been shy about challenging the market leader You’re here (NASDAQ:TSLA) for supremacy in space.
Electric versions of its iconic vehicles such as the Mustang sports car and F-150 pickup truck could help the Detroit automaker gain market share and become a global leader in the fast-growing electric vehicle sector.
As of the date of publication, Joel Baglole held long positions in AAPL, V and BAC. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.