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Blue-chip stocks have many advantages. Typically blue-chip stocks are issued by large, mature and financially strong companies. Benefits of owning blue-chip stocks include stable finances, strong earnings growth, profitability and consistent dividend payments. Blue-chip stocks are typically issued by companies dominating their sector or industry, not easily disrupted by competitors or market forces. Analysts often describe blue-chip stocks as being “defensive” in nature because their share price tends to fall less during market turmoil and recover faster when the bulls are running on Wall Street.
Given all of their benefits, it’s advisable for investors to hold a decent number of blue-chip securities in their portfolio. While blue-chip stocks have a reputation for growing at a slower pace than newer and flashier growth stocks, this isn’t always the case. Some very old and established blue-chip stocks continue to outperform the market even today. Here are hot stocks: The three best opportunities for investing in blue chips.
Target (TGT)
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The stock of discount retailer Target (NYSE:TGT) has been in an upswing ever since the company issued fourth quarter 2023 financial results that exceeded Wall Street’s expectations. TGT stock is up nearly 20% this year after the company reported earnings per share (EPS) of $2.98 versus $2.42 that was expected among analysts. In the final quarter of last year, revenue totaled $31.92 billion, compared to the Wall Street forecast of $31.83 billion.
The strong earnings are a big turnaround for Target, which was complaining a year ago about theft at its retail outlets. Now, the company is rolling out new sales drivers, including a membership rewards program, to accelerate growth. In February, Target launched a new low-priced private label brand called “Dealworthy,” with products such as socks, laundry detergent and other items available for less than $10.
The rewards program and cheaper items should help to drive Target’s earnings and share price higher in coming quarters. TGT stock is up 117% over the past five years.
American Express (AXP)
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Credit card giant American Express (NYSE:AXP) has been on a tear over the past year, with its stock outperforming all of its competitors. Over the last 12 months, AXP stock has increased 40%, including a 23% gain this year. The share price surged after management announced they’re raising the quarterly dividend payment by 17% to 70 cents per share.
The dividend boost was announced along with strong financial results and a sunny outlook for the year ahead. Management said they expect revenue growth of 9% to 11% and EPS of $12.65 to $13.15. The guidance was better than earnings of $12.38 a share expected on Wall Street for all of this year. The credit card company foresees spending by its affluent clientele remaining strong in 2024, further supporting earnings and the stock.
Intel (INTC)
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Chipmaker Intel Corp. (NASDAQ:INTC) hasn’t been setting the world on fire lately. There might be a buy-the-dip opportunity with INTC stock. The company has received $8.50 billion from the U.S. government to build new microchip and semiconductor manufacturing facilities. Intel has said that the government funding will support the creation of factories in Arizona, New Mexico, Ohio, and Oregon.
The company is expecting federal loans up to $11 billion and a tax credit benefit on up to 25% of over $100 billion in investments. The windfall should help Intel’s transition from a microchip designer to a manufacturer of chips and semiconductors. Earlier this year, Intel halted a $20 billion plant construction in Ohio while it awaited government funding, hurting its stock.
INTC stock is down 10% on the year. However, now might be the time to buy should the share price bottom and reverse higher.
On the date of publication, Joel Baglole 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.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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