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)
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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)
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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)
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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
I'm an experienced financial analyst and enthusiast with a deep understanding of the stock market. I've closely followed and analyzed various companies and their financial performance over the years. Now, let's delve into the concepts mentioned in the article about blue-chip stocks.
Microsoft (MSFT): Microsoft is highlighted as a stable blue-chip stock with a market cap close to $3 trillion. The company is known for its adaptability and innovation, particularly in artificial intelligence (AI). Microsoft's recent quarterly results are expected to show strong growth in the cloud segment, contributing to its overall success. With a remarkable gross profit margin of about 70%, Microsoft is considered a solid business. The article emphasizes the company's historical performance, a dividend yield of 0.76%, and the CEO's ambitious revenue target of $500 billion by 2030.
Visa (V): Visa is portrayed as a rock-solid business with a global presence, catering to over 80 million merchants. The company's business structure, characterized as asset-light, allows it to generate revenue every time a Visa card is used, minimizing operating expenses. Despite macroeconomic challenges, Visa has shown resilience, reporting healthy revenue and earnings growth. The article points out Visa's strong position in the digitization trend, anticipating increased card usage. With a current stock price of $271 and a dividend yield of 0.77%, Visa is considered a stable and growth-oriented investment.
Amazon (AMZN): Amazon, another significant blue-chip stock, is discussed in the context of its rebound in 2023 and expected impressive revenue numbers in the fourth quarter. The company's profitability has returned, and its financial health is deemed better than ever. Amazon's plans for a $15 billion investment to expand its cloud segment in Japan are highlighted. The article emphasizes the importance of Amazon Web Services (AWS) and the growing advertising revenue. The stock, currently trading at $154, is seen as having substantial growth potential, with analysts raising price targets.
In summary, the article provides insights into three blue-chip stocks—Microsoft, Visa, and Amazon—emphasizing their stability, growth potential, and key factors influencing their performance in the market.
