In this article, we discuss the 10 safe blue chip stocks to buy in June.
Inflation is eating away at the purchasing power of consumers across the United States. The Bureau of Labor Statistics on Friday released inflation data for the month of May, where the CPI (consumer price index) rose 8.6% from a year ago. This was the highest yearly increase in more than 40 years. Core inflation, measured excluding food and energy, also gained 6%, above the estimated figure of 5.9%. These inflationary trends were pushed along by the rise in energy sector prices, which posted annual gains of 34.6%. Fuel oil prices posted the biggest hike and became increasingly difficult to afford, gaining 106.7% from the year-ago figures. This led to the 2-year Treasury Bond yield reaching upwards of 2.9%, an increment of more than 8 basis points. The data suggests a very strong possibility of an economic recession, and Bankrate chief financial analyst Greg McBride recently noted:
“So much for the idea that inflation has peaked..Inflation continues to rear its ugly head and hopes for improvement have been dashed again.”
Blue chip stocks are giants in their respective fields, and are the safest names to buy because of their dominant and competitive positioning in the market, strong cash flows, and a line of products/services that enjoy strong demand in virtually every economic climate. To help our investors navigate these challenging times, we’ve prepared a list of the 10 safe blue chip stocks to buy in June, which includes names like The Coca-Cola Company (NYSE:KO), Bank of America Corporation (NYSE:BAC), and Amazon.com, Inc. (NASDAQ:AMZN), along with others mentioned below.
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Our Methodology
Safe Blue Chip Stocks to Buy in June
10. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 43
Share Price (as of June 9): $137.96
International Business Machines Corporation (NYSE:IBM) is an information technology giant which offers computer hardware, software, IT research and finance services in more than 170 countries around the globe. It has risen 11.18% in the last 6 months as of June 9, and recently posted strong results for the first quarter. EPS came in above estimates by $0.01, while quarterly revenue of $14.2 billion also featured above market estimates by nearly $353 million.
As of the end of the first quarter, 43 out of the 900+ hedge funds tracked by Insider Monkey owned positions in International Business Machines Corporation (NYSE:IBM), with a collective price tag of $1.16 billion. Arrowstreet Capital, the largest shareholder of IBM, recently upped its stake in the company by 36%, with 4.46 million shares priced at $579.9 million reported at the end of the first quarter of 2022.
As of June 9, the company offers a 4.78% yield to shareholders. It declared a $1.65 per share quarterly dividend on April 26, representing a 0.6% increase from its prior dividend of $1.64.
BofA analyst Wamsi Mohan on April 20 reiterated a ‘Buy’ rating on International Business Machines Corporation (NYSE:IBM) shares and raised the price target to $165 from $162, after the firm posted solid quarterly results and gave a robust outlook for 2022. The analyst notes that IBM’s portfolio is defensive and can outperform in a tricky macro setup, and he expects sustained revenue growth beyond 2022.
Here is what St. James Investment Company had to say about International Business Machines Corporation (NYSE:IBM) in its Q4 2021 investor letter:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of
time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
Companies like The Coca-Cola Company (NYSE:KO), Bank of America Corporation (NYSE:BAC), and Amazon.com, Inc. (NASDAQ:AMZN), along with International Business Machines Corporation (NYSE:IBM) are some of the best blue chip stocks to buy in June.
9. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 48
Share Price (as of June 9): $61.23
Mondelez International, Inc. (NASDAQ:MDLZ) is a Chicago-based confectionery, beverage and snack food company with operations in approximately 160 countries around the world. Its brands include Cadbury, Oreo, and Toblerone, among others.
On May 19, Mizuho analyst John Baumgartner recommended buying shares of Mondelez International, Inc. (NASDAQ:MDLZ), to take advantage of recent share price weakness. Along with two other food stocks, Baumgartner thinks MDLZ is well-positioned in the current environment. He has a ‘Buy’ rating on the stock and a $75 price target.
In the first quarter, Mondelez International, Inc.’s (NASDAQ:MDLZ) EPS stood at $0.84, above market forecasts by $0.09. Quarterly revenue also beat estimates by $293.8 million, coming in at $7.76 billion. The company has boosted its dividend payments to shareholders for 8 consecutive years, and delivers a 2.29% yield as of June 9.
48 hedge funds from the Q1 database of Insider Monkey disclosed ownership of stakes in Mondelez International, Inc. (NASDAQ:MDLZ) with a collective price tag of $1.6 billion. This represents a bullish trend over the previous quarter where 40 hedge funds held $1.47 billion worth of stakes in the company. Diamond Hill Capital was its largest shareholder in the first quarter, with 6.97 million shares valued at $437.7 million.
8. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 59
Share Price (as of June 9): $50.35
Dell Technologies Inc. (NYSE:DELL) is a Texas-based company which offers personal computers, computer hardware, and cloud and data management services. With a market cap of $37.2 billion, it is one of the most prominent PC manufacturers in the world. As of June 9, the firm pays a 2.62% yield, and has posted gains of 10.66% in the last 1 month.
On May 27, Deutsche Bank analyst Sidney Ho lowered the firm’s price target on Dell Technologies Inc. (NYSE:DELL) to $60 from $65 and maintained a ‘Buy’ rating on the company shares. Ho noted that despite a weak macro environment and a challenging supply chain, the company posted “strong” Q1 results and is showing better execution than competitors. The analyst sees the company as well-positioned to benefit from strong enterprise demand.
Reporting its Q1 earnings on May 26, Dell Technologies Inc. (NYSE:DELL) disclosed earnings per share of $1.84, outperforming estimates by $0.45. Revenue stood at $26.1 billion for the first quarter, exceeding analysts’ expectations by $887.2 million.
59 hedge funds were bullish on Dell Technologies Inc. (NYSE:DELL) at the end of the first quarter, with combined stakes worth $1.94 billion. With 5.23 million shares valued at $262.9 million, Lyrical Asset Management was the top Q1 shareholder of Dell Technologies Inc. (NYSE:DELL).
Investment firm Third Point Management talked about many stocks in its Q3 2021 investor letter, and Dell Technologies Inc. (NYSE:DELL) was one of them. It said:
“Michael Dell has created substantial value for shareholders since re-listing the company several years ago. Earlier this year, Dell Technologies announced that it would be spinning its $50 billion stake in VMWare, which we believe will unlock the underappreciated value of the Dell server and PC businesses. Dell’s best attribute has been strong free cash flow generation, which the company has used to de-lever and create significant latent value for equity holders. Looking ahead, we believe this core Dell business, which still trades at a discount to its hardware peer group, should instead command a premium multiple thanks to its leading market share, profitability, and impressive execution. There are few large cap companies which possess a nearly 10% FCF yield, 2.5% dividend yield and 1.5x leverage ratio; Dell is one of them.”
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 64
Share Price (as of June 9): $61.80
The Coca-Cola Company (NYSE:KO) ranks among the best defensive stocks to buy. The renowned beverage maker has increased its dividend payments to shareholders for 59 years in a row, and pays a 2.85% yield as of June 9. The stock has climbed 10.53% in the last 12 months, whilst jumping 9.81% in the last 6 months.
On May 9, research firm BofA added The Coca-Cola Company (NYSE:KO) to the firm’s “US 1” list, a collection of best investment ideas picked from among its coverage of Buy-rated, US-listed stocks. Truist analyst Bill Chappell on April 26 gave The Coca-Cola Company (NYSE:KO) an unchanged ‘Buy’ rating, and a raised price target of $75, up from $70. He noted that the firm posted strong Q1 results with 18% organic growth, and reaffirmed 2022 guidance despite increased cost pressures and headwinds from Russia-Ukraine crisis.
Famous investor and billionaire Warren Buffett has been building his position in The Coca-Cola Company (NYSE:KO) for decades, and his Berkshire Hathaway ranks as its largest Q1 shareholder with 400 million shares valued at $24.79 billion. In total, 64 hedge funds were long The Coca-Cola Company (NYSE:KO) shares at the close of March, with $29.17 billion in combined stakes.
For the first quarter of 2022, The Coca-Cola Company (NYSE:KO) reported earnings per share of $0.64, exceeding estimates by $0.06. Quarterly revenue stood at $10.5 billion, outperforming analysts’ predictions by $670.8 million and representing a 16.44% growth in comparison to the year-ago quarter.
ClearBridge Investments talked about The Coca-Cola Company (NYSE:KO) in its Q4 2021 investor letter. Here’s what the fund said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
6. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 64
Share Price (as of June 9): $77.34
NextEra Energy, Inc. (NYSE:NEE) is an energy company which produces and supplies electricity to consumers across the United States. Apart from coal, natural gas and nuclear sources, the company generates a sizeable portion of its electricity using renewable energy such as wind and solar. NextEra Energy, Inc. (NYSE:NEE) also ranks as a proven dividend payer, with 27 years of payout increases under its belt and a yield of 2.20% as of June 9.
In late April, Credit Suisse analyst Nicholas Campanella assumed coverage of NextEra Energy, Inc. (NYSE:NEE) with an ‘Outperform’ rating and a $87 price target. The analyst views the company shares as fundamentally attractive, noting that despite near-term supply-related concerns, NextEra Energy, Inc. (NYSE:NEE) is better positioned in the current inflationary environment relative to peers because of its size and scale.
Hedge funds were seen grabbing up NextEra Energy, Inc. (NYSE:NEE) stock. At the end of Q1 2022, 64 hedge funds disclosed ownership of stakes in the company with a combined value of $2.84 billion. In contrast, 55 hedge funds were stakeholders in the energy firm a quarter ago. Fisher Asset Management was the top shareholder of NextEra Energy, Inc. (NYSE:NEE) in Q1 2022 with a $1.32 billion stake.
NextEra Energy, Inc. (NYSE:NEE) is on the radar of investors on Wall Street, along with other blue chip stocks like The Coca-Cola Company (NYSE:KO), Bank of America Corporation (NYSE:BAC) and Amazon.com, Inc. (NASDAQ:AMZN).
5. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 69
Share Price (as of June 9): $160.98
American Express Company (NYSE:AXP) deals in the provision of credit cards, payment solutions, and travel-related services worldwide. In its Q1 results, the firm disclosed EPS of $2.73, exceeding analysts’ forecasts by $0.26. Revenue of $11.74 billion for the quarter outperformed Street estimates by roughly $76 million and grew 29.47% in comparison to the same period over last year.
Edward Jones analyst Kyle Sanders on June 6 upgraded American Express Company (NYSE:AXP) to ‘Buy’ from ‘Hold’. He noted that the firm’s “loyal base” of affluent customers will be less affected by the current inflationary environment, enabling AXP to post strong spending trends relative to its credit card peers. Sanders also sees the firm highlighting “robust” new account growth, on the back of its efforts to strengthen its product offerings and attract younger customers.
A detailed study of the 912 hedge funds in the first quarter database of Insider Monkey showed that 69 hedge funds were long American Express Company (NYSE:AXP), with collective stakes worth $33.18 billion. This shows a positive trend from the previous quarter where 64 hedge funds were bullish on the company shares. Berkshire Hathaway held a $28.35 billion position in American Express Company (NYSE:AXP) during the first quarter, which represented 7.79% of Warren Buffett’s entire portfolio and established him as the firm’s largest shareholder.
Here is what ClearBridge Investments had to say about the recent performance of American Express Company (NYSE:AXP) in its Q2 2021 investor letter:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
4. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 76
Share Price (as of June 9): $145.43
AbbVie Inc. (NYSE:ABBV) is a biopharmaceutical firm based in Illinois, which boasts a healthy portfolio of revenue-generating drugs, and many innovative therapies in its future pipeline. The company doles out a 3.88% dividend to shareholders as well, and has gained 25.11% in the last 12 months as of June 9.
On May 2, Wells Fargo analyst Mohit Bansal kept an ‘Overweight’ rating on AbbVie Inc. (NYSE:ABBV) shares, and increased the price target to $200 from $165. He notes that right now is the time to own ABBV shares, given they are at least 35% undervalued considering the firm’s long-term growth potential. Bansal rates AbbVie as his top pick in the sector. In early June, clinical trials showed that the Imbruvica drug, developed by AbbVie Inc. (NYSE:ABBV) in collaboration with Johnson & Johnson (NYSE:JNJ), reduced the risk of disease progression or death by 25% in patients with rare lymphoma cancer.
In the first quarter, AbbVie Inc. (NYSE:ABBV) posted earnings per share of $3.16, outperforming estimates by $0.02. Quarterly revenue was recorded at $13.5 billion, up 4.66% from the year-ago quarter but falling short of analysts’ expectations by $74.9 million.
Arrowstreet Capital, with 4.65 million shares worth $754.2 million, was the biggest shareholder of AbbVie Inc. (NYSE:ABBV) in the first quarter. In total, 76 hedge funds reported bullish bets on the company shares, with a collective price tag of $3.66 billion.
Here is what Miller Howard Investments had to say about AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
3. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Share Price (as of June 9): $34.51
Bank of America Corporation (NYSE:BAC) is a bank holding company based in North Carolina which offers financial services to clients across the United States. With a market cap of $278 billion, it ranks as one of the best blue chip stocks to buy in the banking sector. The company pays a dividend yield of 2.43% as of June 9, and has increased its payout to shareholders for 8 years in a row.
On May 3, Oppenheimer analyst Chris Kotowski maintained an ‘Outperform’ rating on Bank of America Corporation (NYSE:BAC) shares with a revised price target of $50, down from $52. He notes that banks tend to do well when interest rates rise, and that they should remain “solidly profitable with their dividends intact” in the current market situation. The analyst urged investors to benefit from the recent share price weakness and buy Bank of America Corporation (NYSE:BAC) stock.
For the quarter ending March, Bank of America Corporation (NYSE:BAC) reported earnings per share of $0.80, beating estimates by $0.06. The company’s revenue of $23.23 billion for the quarter was also above consensus estimates by $135.8 million.
Investors were seen buying up on Bank of America Corporation (NYSE:BAC) stock. At the end of the first quarter, 99 hedge funds were bullish on the company shares, up from 84 in the quarter before. Warren Buffett’s Berkshire Hathaway was the leading shareholder of Bank of America Corporation (NYSE:BAC) in the first quarter, with a gigantic $41.6 billion stake.
Miller Value Partners, an investment firm, mentioned Bank of America Corporation (NYSE:BAC) in its Q1 2022 investor letter. Here’s what the fund said:
“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.
A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).
We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”
2. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
Share Price (as of June 9): $125.31
JPMorgan Chase & Co. (NYSE:JPM) is up next on our list of safe blue chip stocks to buy in June. It is the largest bank in the United States, and the world’s largest bank by market capitalization with a $368 billion value. It offers a 3.19% yield to shareholders as of June 9, and has increased its dividend payments for 9 years in a row.
On May 24, BMO Capital analyst James Fotheringham reiterated a ‘Market Perform’ rating on JPMorgan Chase & Co. (NYSE:JPM) shares and bumped the price target to $156 from $150. The analyst sees the firm as a long-term market share winner among global banks, but notes some headwinds offsetting the near-term benefits of rising interest rates and growing credit demand.
Hedge fund sentiment around JPMorgan Chase & Co. (NYSE:JPM) was positive at the end of the first quarter, where a total of 110 hedge funds owned positions in the banking firm, in contrast to 107 hedge funds in the previous quarter. Billionaire Ken Fisher’s Fisher Asset Management was the biggest shareholder of JPMorgan Chase & Co. (NYSE:JPM) in the first quarter of 2022, with a position consisting of 7.76 million shares valued at $1.05 billion.
Investment firm ClearBridge Investments talked about JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here’s what the fund had to say:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Share Price (as of June 9): $116.15
Amazon.com, Inc. (NASDAQ:AMZN) is perhaps the safest, most sought-after blue chip stock in the market. On June 6, the company’s previously announced 20:1 stock split came into effect, pricing the shares down from above $2000 to $120. As of June 9, Amazon.com, Inc. (NASDAQ:AMZN) shares are priced at $116.15. This opens the door for retail investors to purchase shares of the biggest e-commerce player in the United States.
On June 6, MKM Partners analyst Rohit Kulkarni maintained a ‘Buy’ rating on Amazon.com, Inc. (NASDAQ:AMZN) shares, and set a price target of $180, roughly in-line with his previous target of $3,625. He thinks Amazon is the best “safe haven” internet stock within the current economic climate, and sees it as the most diversified internet company in the world. Recent media reports have stated that Amazon.com, Inc. (NASDAQ:AMZN) is building a local advertising business, in hopes of competing with the hefty ad revenues drawn by Alphabet Inc. (NASDAQ:GOOG) and Meta Platforms Inc. (NASDAQ:FB).
271 hedge funds held positions in Amazon.com, Inc. (NASDAQ:AMZN) at the end of the first quarter, with an aggregate value of more than $48 billion. This made it the most popular stock in the Q1 database of Insider Monkey.
Investment firm Polen Capital talked about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter. Here’s what the fund said:
“Amazon has done a terrific job managing through the pandemic, in our view. Many companies struggled to pivot their business model during COVID-19, which represented an existential threat. Amazon had the opposite problem – a surge in demand. The company leaned into this by entering an extremely heavy investment cycle, doubling its fulfillment network and headcount over the past two years. To put this into context, Amazon added 273,000 employees in the last half of 2021 on top of over 400,000 employees the prior year. The company has also made significant Capital Expenditures, adding IT infrastructure for AWS and transportation capacity during this period. This all took place in the face of inflation related to wage increases and higher pricing from third-party carriers supporting the company’s fulfillment network. These heavy investments paid off—AWS grew 40% year over year, reached a $71B annual run rate, and total company revenue posted a two-year annual compounded growth rate of 25%. We believe this heavy investment cycle, like Amazon’s previous ones, will continue to support ongoing growth and will further separate Amazon from its competition while also providing the ability to increase margins through economies of scale. With respect to the margins specifically, AWS and Advertising – two fast-growing businesses – continue to contribute greater operating earnings to the overall business. We believe management has done an excellent job managing through this period and that the company is even stronger today than when COVID-19 first began to spread around the world.”
You can also take a look at 10 Best Gold Stocks To Buy Now and 10 Best Tech Stocks To Invest in Now.
