At first glance, a concerted focus on stable blue-chip stocks might seem excessively cautious. After all, the market is booming, companies are hiring and people are spending. Don’t readily believe everything that you hear.
No, I’m not advocating a doom-and-gloom narrative. However, there’s some evidence that a rotation out of the usual suspects – typically technology-related – is occurring, leading to other entities to play catch up. Yes, seemingly everyone loves artificial intelligence and what not. But this space may be getting too hot.
On the other hand, some very reliable businesses just aren’t getting the attention they deserve. But based on market and economic undercurrents, the big dogs might thrive. With that, here are some intriguing blue-chip stocks to consider.
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Costco (COST)
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A membership-only big-box retailer, Costco (NASDAQ:COST) in my opinion mainly benefits from the implied resilience of its core customer group. Basically, the company caters to relatively young, educated and upwardly mobile households. Under difficult circ*mstances, COST should be insulated compared to much of the competition. Therefore, it seems an intriguing idea for blue-chip stocks.
Notably, COST stock is also priced at a discount. Recently, the company’s shares suffered red ink as the business missed sales estimates for its latest earnings disclosure. However, investors shouldn’t miss the forest for the trees. By the end of this fiscal year, Costco should generate revenue of $254.5 billion. That would take it 5% above last year’s tally of $242.29 billion.
Looking out to 2025, analysts believe revenue will land at $272.1 billion. If so, that would imply a 6.9% jump from 2024’s projected sales. Again, because Costco caters to higher-income shoppers, it wouldn’t be surprising to see the company hit the higher end of analysts expectations.
In that case, we’d be looking at 2024 sales of $260.62 billion and 2025 sales of $288.16 billion.
McDonald’s (MCD)
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One of the world’s most famous blue-chip stocks, McDonald’s (NYSE:MCD) reigns supreme over the fast-food industry. Fundamentally, McDonald’s should continue benefiting from its cheap eats business model. Not only that, but the company’s pivot to its coffee-and-other-beverages-focused brand CosMc should be intriguing. As society fully normalizes from the pandemic, CosMc should help bolster the growth narrative.
Speaking of which, Yahoo Finance points out that analysts believe that by the end of this fiscal year, sales will hit $26.89 billion. That would imply 5.5% growth from last year’s haul of $25.49 billion. Turning to fiscal year 2025, revenue may reach $28.51 billion. If so, we would be talking about a 6% increase over 2024’s projected top line.
On the profitability front, earnings per share in 2024 should be $12.44, above the $11.94 posted in 2023. And in 2025, analysts are anticipating EPS of $13.57.
Lastly, covering experts peg MCD shares a consensus moderate buy with a $323.24 average price target. The high-side estimate calls for $357. Combined with its 2.18% dividend yield, McDonald’s makes for one of the top blue-chip stocks.
Deere (DE)
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As an agricultural industry giant, Deere (NYSE:DE) represents one of the most important blue-chip stocks. Basically, it’s an indirect but essential component of the broader food supply chain. Not only that, DE may enjoy a political catalyst. With political rumblings suggesting that the 2024 election could be tighter than expected, Deere could be a top beneficiary.
Late last year, President Joe Biden announced over $5 billion in new investments. A good chunk of that will go toward climate-smart agriculture. In addition to Biden’s concerns about water, Deere could indirectly benefit. After all, the company’s equipment could play a role in agricultural and water management-related endeavors.
However, DE stock has underperformed over the past year and that’s partially due to poor sales expectations. In 2024, analysts anticipate revenue to land at $47.88 billion, down almost 14% from last year. However, the high-side also calls for $54 billion, which would greatly mitigate the red ink.
Overall, covering experts rate DE a consensus moderate buy with a $420.94 average price target. The high-side target calls for $483, implying bullishness that belies the current underperformance in the market.
Kenvue (KVUE)
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When it comes to blue-chip stocks that can ride out anxieties, I’d turn to Kenvue (NYSE:KVUE). Technically, KVUE entered the public domain last year, making it a “new” tradable entity. However, it was spun off from Johnson & Johnson (NYSE:JNJ), which now focuses on pharmaceuticals and medical technology. On the other hand, Kenvue now operates the consumer healthcare products division. Frankly, this business might be more compelling.
Under difficult economic conditions, people might not have access to the best healthcare solutions. However, anyone can reasonably afford over-the-counter medication and other personal care solutions. Plus, not everybody requires the most rigorous medical solutions but everyone has suffered the occasional headache or papercut. That’s where Kenvue comes into play.
By the end of this fiscal year, analysts believe sales will reach $15.66 billion. That doesn’t call for much growth over last year’s sales of $15.44 billion. However, by 2025, the top line could rise to $16.22 billion.
They also peg shares as a consensus moderate buy with a $22.78 average price target. Kenvue also pays a dividend with a 3.06% yield, making KVUE one of the more intriguing blue-chip stocks.
Microsoft (MSFT)
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One of the most powerful technology companies in the world, Microsoft (NASDAQ:MSFT) needs no introduction. Recently, the company has been generating headlines for its investments in artificial intelligence. Clearly, they’ve been paying off quite handsomely. However, Microsoft symbolizes one of the blue-chip stocks to buy for long-term stability because it’s the lifeblood of business.
When things need to get done in the real world, whether they be reports or spreadsheets or presentations, they’re done on Microsoft programs. I’d argue that they’ve become part of the collective digital DNA. And since that’s what everyone else uses, being fluent in Microsoft is an essential component of business (and academic) success.
By the end of this year, the consensus calls for revenue to hit $244.29 billion. That’s a 15.3 jump from last year’s print of $211.91 billion. Given the company’s vast footprint, that doesn’t seem an unreasonable target. For 2025, sales may reach $279.31 billion or 14.3% up from projected 2024 revenue.
Covering experts rate MSFT a consensus strong buy with a $469.34 average price target. Notably, the high-side target calls for $600.
Chevron (CVX)
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An oil and gas giant, Chevron (NYSE:CVX) will probably incur some impact from the 2024 elections. Obviously, if the Republicans take power, their penchant for supporting hydrocarbons may be more beneficial to CVX stock. However, given broader geopolitical realities, I believe the Democrats must adopt a more realistic, nuanced approach to fossil fuels. So, either way, Chevron could be a winner.
Granted, that doesn’t align with prevailing sentiment. For example, analysts believe that by the end of this fiscal year, revenue will come in at $200.79 billion. That would be slightly below parity against last year’s print of $200.95 billion. However, the high-side estimate calls for sales to reach $246.34 billion, implying almost 23% year-over-year growth.
It’s possible that the truth could land somewhere in the middle. As the global community fully normalizes from the Covid-19 crisis, it’s likely that hydrocarbon demand will increase. Also, electric vehicles haven’t really looked so hot these days.
Experts peg shares as a moderate buy with a $176.63 price target. Combined with its dividend yield of 4.15%, CVX is one of the blue-chip stocks to buy.
UnitedHealth (UNH)
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To be completely upfront, the bullish case for UnitedHealth (NYSE:UNH) seems risky. Late last month, The Wall Street Journal reported that the U.S. Department of Justice launched an antitrust investigation into the company. Basically, there are concerns about UnitedHealth’s insurance unit and its Optum health services arm, which owns physician groups among other assets.
As a result, UNH stock has underperformed significantly. Nevertheless, looking ahead, the fallout could represent an undervalued opportunity. I don’t want to say the business is too big to fail but it plays a major role in the broader healthcare industry. Also, the aging and sizable baby boomer population presents a massive total addressable market.
For 2024, experts project sales to reach just over $401 billion, about 8% higher than last year’s tally of $371.62 billion. By the end of 2025, revenue may land at over $432 billion. That would be 7.7% above 2024’s projected top line.
Finally, covering analysts rate UNH a consensus strong buy with a $591.29 average price target. The high side calls for $675, making it one of the compelling 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.comPublishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
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