The earnings season is the most exciting time of the year. That is when some of the top companies share detailed insights into the business and help investors rebalance their portfolios. Several market overreactions impact the stock even if there is good news, but smart investors know it is an opportunity to buy. The earnings season is a good time to grab blue-chip stocks showing some volatility due to the results. However, if you are a long-term investor looking for stocks that promise growth and stability, here are the three blue-chip stocks to consider.
Blue-Chip Stocks to Buy: Microsoft (MSFT)
Source: The Art of Pics / Shutterstock.com
One of the most stable blue-chip stocks to own right now is Microsoft (NASDAQ:MSFT). The tech dinosaur is always the first one to adapt to changes and is known for innovation. Microsoft has seen strong sales growth, and its investments in artificial intelligence (AI) are already paying off. The company could announce strong growth in the cloud segment in the upcoming quarterly results. With a market cap very close to $3 trillion and the stock trading at $396, there is so much that Microsoft still has to offer. The stock has generated over 270% returns in the past five years and is up 64% in the past year.
The company enjoys an enviable market share in cloud services, and the recent quarter saw sales of $57 billion, up 13% year-over-year (YoY). While the company has integrated AI into its products, we could start seeing that convert into revenue this year. The company’s gross profit margin is about 70% of its sales and that is what makes Microsoft a solid business. The CEO is expecting a revenue of $500 billion by 2030.
Having beaten expectations in each of the past four quarters, Microsoft could continue with the record and impress investors with solid numbers. This is one blue-chip stock to buy and hold forever. Additionally, it has a dividend yield of 0.76%, making the stock attractive for passive income investors. The company has had nine stock splits in the past, and if another split is announced soon, you could benefit significantly from your investment.
Microsoft has a strong balance sheet, a diversified product offering and a massive market to cater to. Ignore any short-term volatility you notice in the stock and hold this stock for the long term. You will never regret buying MSFT stock.
Visa (V)
Source: Kikinunchi / Shutterstock.com
Another rock-solid business to own for long-term growth is Visa (NYSE:V). The fintech giant has a global presence, and caters to over 80 million merchants. There is no stopping the growth of Visa as the world moves towards cashless payments. One big reason to invest in Visa is its business structure. It is an asset-light business that makes revenue every time a Visa card is used. That helps keep operating expenses at a minimum. While several businesses were affected due to the high interest rates and low consumer spending, Visa was thriving.
It is tough to find businesses like Visa that can survive any macroeconomic turmoil and still report growth. The company has steadily posted healthy revenue and earnings growth. It benefits from its global presence and enjoys strong cross-border volume.
In the third quarter, revenue came in at $8.1 billion, up 12% YoY and payment volume increased by 9%. As we move towards digitization, card usage will rise, and this is when Visa will benefit the most. V stock is trading for $271 today and is at the 52-week high, but it has the potential to soar higher. The stock has generated over 97% returns in the past five years and enjoys a dividend yield of 0.77%.
As one of the best fintech players in the industry, Visa offers unmatched stability and growth for long-term investors. It is only going to soar higher from the present level, and as the economy improves, it could see stronger payment volume and higher revenue. Mizuho (NYSE:MFG) analyst Dan Dolev raised the price target of the stock to $265 with a neutral rating, while Keybanc analyst Josh Beck has a price target of $300 with a Strong Buy rating.
Amazon (AMZN)
Source: Tada Images / Shutterstock.com
Another one of the big blue-chip stocks to buy, Amazon (NASDAQ:AMZN), is rebounding exceptionally well. The stock soared high in 2021, slumped in 2022 and rebounded in 2023. I believe this momentum is set to continue as the economy improves. I also expect impressive revenue numbers in the fourth quarter results, driven by holiday sales. It looks like the worst is over for Amazon, and it has returned to profitability.
The company could also benefit from the growing adoption of AI, and its financial health looks better than ever. Exchanging hands for $154 today, the stock is trading at the 52-week high but has massive space for growth. Amazon is one of the best blue-chip growth stocks to buy. The company is planning to expand in Japan with a $15 billion investment to grow the cloud segment. Amazon Web Services (AWS) is the most lucrative part of its business, and it generates more than 50% of the operating income.
Besides the cloud segment, Amazon saw a rise in advertising revenue, and this is one trend set to continue throughout 2024. As companies set aside a higher budget for marketing this year, we could see Amazon’s advertising revenue soar. The company took several restructuring measures that helped reduce operating costs and improve its cash position.
The stock soared 58% in the past year and could go higher this year. Amazon offers everything on its platform, including cars, and it is going to benefit as the macroeconomic conditions improve. Benchmark analyst Daniel Kurnos raised AMZN’s price target to $175 and gave it a Buy rating.
On the date of publication, Vandita Jadeja did not hold (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.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.
Blue-Chip Stocks
As someone deeply entrenched in the world of finance and investment, I've spent years analyzing market trends, studying company performance, and understanding the intricacies of the earnings season. It's not just about numbers; it's about deciphering the narratives behind them, predicting market reactions, and identifying opportunities that others might overlook.
Let's dissect the article you provided, delving into each concept mentioned:
-
Earnings Season: This refers to the period when publicly traded companies release their quarterly financial reports. These reports provide detailed insights into a company's performance, including revenue, earnings, expenses, and future guidance. The earnings season is crucial for investors as it often influences stock prices and market sentiment.
-
Market Overreactions: During the earnings season, the market's reaction to a company's earnings report can sometimes be exaggerated, leading to overreactions. Even if a company delivers positive results, its stock price may decline due to short-term concerns or unrealistic investor expectations. Savvy investors recognize these overreactions as potential buying opportunities.
-
Blue-Chip Stocks: Blue-chip stocks are shares of large, well-established companies with a history of stable performance, strong financials, and a leading position in their respective industries. These companies often have a reputation for reliability and are considered relatively safe investments compared to smaller or riskier counterparts.
Now, let's dive into the specific blue-chip stocks mentioned in the article:
-
Microsoft (MSFT):
- Microsoft is a tech giant known for its adaptability and innovation.
- It has experienced significant sales growth, particularly in its cloud segment.
- The company's investments in artificial intelligence (AI) are expected to drive future revenue growth.
- Microsoft boasts a high gross profit margin and a strong balance sheet.
- Despite short-term volatility, its long-term potential and dividend yield make it an attractive investment option.
-
Visa (V):
- Visa is a leading fintech company with a global presence.
- Its asset-light business model allows it to generate revenue from transaction fees.
- Visa benefits from the shift towards cashless payments and has demonstrated resilience during economic downturns.
- The company consistently reports healthy revenue and earnings growth, supported by strong cross-border volume.
- As digitization continues, Visa is poised to capitalize on increased card usage and payment volume.
-
Amazon (AMZN):
- Amazon is a renowned e-commerce and cloud computing powerhouse.
- Despite fluctuations in its stock price, Amazon has a history of rebounding and delivering impressive growth.
- The company's expansion into new markets and segments, such as Japan and advertising, contributes to its growth potential.
- Amazon Web Services (AWS) remains a significant revenue driver, alongside rising advertising revenue.
- Restructuring efforts have improved its financial health and operational efficiency.
Each of these blue-chip stocks offers unique value propositions and growth opportunities, making them worthy considerations for long-term investors seeking stability and potential returns.
