In this article, we presented the list of the 15 best blue chip stocks to buy now. If you are in a hurry, click to skip ahead and jump to the 5 Best Blue Chip Stocks to Buy Now.
The Federal Reserve is committed to keeping interest rates low for an extended period of time. The traditional 60/40 portfolio isn’t really an option if you are a “buy and hold” investor who really cares about the returns you generate. Ten year Treasury bonds yield 0.8% and that’s before inflation. There is no end in sight to trillion dollar budget deficits and The Federal Reserve can’t print enough money to paper over out of control spending. This won’t lead to inflation in the short-term but what’s going to happen after we get out of the coronavirus recession and the economy starts to heat up again?
If investing in long-term bonds isn’t an option, where can investors park their hard earned savings? One option is dividend stocks. Investors who need current income go for high dividend stocks (see 10 best high dividend stocks to buy) whereas more conservative investors head to dividend growth stocks that are able to boost their dividend payments even during these tough times. Another option for investors is large-cap blue chip companies that are relatively less risky and offer a lot of upside potential both in terms of earnings growth and inflation protection (inflation means these companies will be charging more for their products and services).
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Blue Chip Stocks are huge companies known for their stellar track record, earning them an excellent reputation in the market. These companies are considered the tried and tested stocks. These are the large, established companies that have already made it through the test of time. Thus, gaining them well enough respect from not only their customers but from their shareholders as well. In fact, because these best blue chip stocks are so well known in the market today, as we go along, you might just recognize all of these companies.
Another reason to invest in the best blue chip stocks is because they are typically mature companies that have achieved large market capitalizations and most of these companies pay dividends which means that a portion of their profit is distributed to shareholders in the form of quarterly payments.
You may also consider investing in blue chip stocks because the stocks are hardly ever at risk of bankruptcy, and have very stable streams of diversified sources of revenue. Most of these blue chip stocks are defying economic challenges and some of these companies are what kept our economy afloat during the recent Covid-19 pandemic .
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In order to identify the 15 best blue chip stocks to buy now, we started with the 30 Dow Jones Industrial Average Index components and we were able to narrow down our list down to 15 stocks by using the hedge fund sentiment scores.
Our in-house research has shown that by using the hedge fund sentiment data, we can identify a small group of stocks that can outperform the S&P 500 index on an average by double digits annually. For example, our monthly newsletter portfolio stock picks beat the market by more than 66 percent since March 2017 (see the details here). We have been publicly sharing some of our monthly newsletter’s stock picks as well. In October we shared this real estate stock idea and it is already up more than 50%.
Based on our hedge fund sentiment data, we present to you, the 15 Best Blue Chip Stocks to Buy Now among the 800+ hedge funds by Insider Monkey:
15. Intel Corp (NASDAQ:INTC)
No of Hedge Funds: 66
Total Value of Hedge Fund Holdings: $4 Billion
Intel Corporation is a US based multinational corporation and technology company. The company is considered as one of the world’s largest and most high-valued semiconductor chip producer. It is also among the 10 most profitable companies in America in 2020.
Intel recently purchased SigOpt’s software to use across all Intel’s AI hardware products to help accelerate, amplify and scale Intel’s AI software solution offerings to developers.
The top hedge fund holder of this stock is Ken Fisher’s Fisher Asset Management which had more than $1 billion invested in the stock at the end of September.
During the third quarter of the year, Intel reported revenue of $18.3 billion down by 4% year-over-year.
14. Walmart, Inc. (NYSE:WMT)
No of Hedge Funds: 69
Total Value of Hedge Fund Holdings: $5 Billion
Walmart, Inc. is an American multinational retail corporation. The company operates a series of hypermarkets, department stores, online stores, and grocery stores.
The top hedge fund holder is Michael Larson’s Bill & Melinda Gates Foundation Trust which had over $1 billion invested in the stock at the end of September (see the other picks of this conservative fund).
During the recent Covid-19 pandemic, Walmart reported earnings from E-commerce sales up by 97% and same-store sales up by 9.3%. The company remains positive about the steady growth of E-commerce sales for the holiday season. Greg Smith, the Executive Vice President for supply chain for Walmart US mentioned,
“The holidays are always a special time, and this year, we think the season will mean even more to our customers. As more of them turn to online shopping, we want to ensure we’re staffed and ready to help deliver that special gift to their loved ones while continuing to fulfill our customer’s everyday needs,”
13. Goldman Sachs Group, Inc. (NYSE:GS)
No of Hedge Funds: 70
Total Value of Hedge Fund Holdings: $3 Billion
Goldman Sachs Group, Inc. is an American multinational investment bank and financial services company. They are considered as one of the largest investment banking enterprises in the world.
As of November 27, 2020, Goldman Sachs Group, Inc.’s current dividend payout is $5.00 and the current dividend yield is 2.11%.
The top hedge fund holder is Boykin Curry’s Eagle Capital Management with over $1 billion invested at the end of September.
During the third quarter ended in September 2020, Goldman Sachs Group, Inc. reported net revenue of $10.78 billion.
12. Home Depot, Inc. (NYSE:HD)
No of Hedge Funds: 73
Total Value of Hedge Fund Holdings: $4 Billion
Home Depot, Inc. is one the world’s largest home improvement retailer with more than 2,200 stores across North America. The company markets building materials and home improvement products.
The top hedge fund holder is Ken Fisher’s Fisher Asset Management which had more than $1 billion invested in the stock at the end of September. Fisher Asset Management boosted its stake in HD by 3% during the third quarter.
During the third quarter of the year, Home Depot, Inc. declared a cash dividend of $1.50 per share which makes it their 135th consecutive quarter to pay a cash dividend.
11. Procter & Gamble Co. (NYSE:PG)
No of Hedge Funds: 75
Total Value of Hedge Fund Holdings: $10 Billion
Procter & Gamble Co rnks 11th in our list of the 1 best blue chip stocks to buy now. P&G is an American multinational consumer goods corporation which is known as one of the world’s largest consumer goods companies that specializes in a wide range of essential products.
For this stock, the top hedge fund holder is Andy Brown’s Cedar Rock Capital with over $1 billion invested at the end of September. The fund allocated 35% of its 13F portfolio to PG.
During the fiscal year 2020, net sales were $71 billion, an increase of five percent versus the prior year.
10. Nike, Inc. (NYSE:NKE)
No of Hedge Funds: 75
Total Value of Hedge Fund Holdings: $4 Billion
Nike, Inc. is an American multinational corporation. The company specializes in designing, marketing, and production of footwear, apparel, equipment, accessories, and services worldwide.
The top hedge fund holder is Ken Fisher’s Fisher Assest Management which is also the top fund holder for HD. Ken Fisher had $840 million invested in Nike.
The company recently announced a 12% hike to its dividend that will push the annual payout to $1.10 per share in 2021 compared to $0.70 per share in 2017.
During the fourth quarter fiscal year 2020, Nike, Inc.’s revenue is at $6.3 billion, declining from the previous year brought about by store closures due to the recent Covid-19 pandemic. Polen Capital talked about NKE in its Q2 investor letter. Here is what they said:
“The adjustments to Nike and adidas were a function of COVID-19 spread mitigation policy impacts and price. We believe both companies possess multiple competitive advantages working in concert that should allow them to emerge even stronger relative to competitors once humanity normalizes. However, the fact remains that the majority of their brick-and-mortar stores globally were closed. We applaud the business’s capital allocation to create true omnichannel capabilities in recent years, but these efforts likely will not be enough to offset the lack of business from other areas impacted by the coronavirus. We remain confident in both companies longer term, but we are mindful of the challenges of operating in the current retail environment and believe our position weightings reflect this awareness.”
9. Merck & Co. Inc. (NYSE:MRK)
No of Hedge Funds: 80
Total Value of Hedge Fund Holdings: $6 Billion
Merch & Co. Inc. is considered one of the largest pharmaceutical companies in the world. During the pandemic, they have contributed and committed more than $30 million in support of the global, national, and local Covid-19 response efforts.
During the third quarter of 2020 worldwide sales were $12.6 billion or an increase of 1%.
The company is so influential even Warren Buffet, one of the wealthiest man in the world with an estimated net worth of $88.5 billion as of November 27 invested in it. Click here to see the Top 5 Stocks Warren Buffet Just Bought. It was mentioned that:
“Merck shares have sunk by 13% in 2020, but the stocks looks promising bounce back candidate in 2021. The majority of the company’s drug need to be administered in person, which has heavily impacted results this year given that treatment of all but the most serious conditions is being deferred during the pandemic. Sales of cancer drug Keytruda, one of its most important assets, surges 21% year-over-year in Q3, putting Merck in a good position once some of its other drugs can be deployed more frequently again by doctors.”
8. Johnson & Johnson (NYSE:JNJ)
No of Hedge Funds: 82
Total Value of Hedge Fund Holdings: $4 Billion
Johnson & Johnson is an American multinational company is known to be one of the most valuable companies, providing pharmaceutical and consumer packaged goods.
For this stock, the top hedge holder is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital with more than $1 billion invested in the stock at the end of September.
During the third quarter of 2020, Johnson and Johnson reported adjusted earnings of $2.20 per share. The company generated $21.08 billion in revenue.
7. UnitedHealth Group Inc. (NYSE:UNH)
No of Hedge Funds: 89
Total Value of Hedge Fund Holdings: $8 Billion
UnitedHealth Group Inc. owns and manages organized health systems. It is one of the largest healthcare companies in the world. The company is committed to leading in the development of a next-generation health system.
During the third quarter of 2020, the company reported a revenue of $65.1 billion which grew 8% led by 21% growth at Optum.
UnitedHealth Group, Inc. has been the choice of many investors because of its good track record. Last October, we published an article related on Nomadic Value Investment Partners’ positive support for UNH. Here they mentioned:
“We upsized United Health (UNH) for a couple of reasons. First, the company has performed amazingly well despite the pandemic. It is estimated that 70% of UNH’s patient flow is already directed under VBC arrangements and >50% of patients are seeing internally employed physicians5. During stay-in-place, UNH was able to continue business as usual for this substantial portion of its patient base by retooling in-person physicians to be virtual care physicians”
6. Salesforce.com Inc (NYSE:CRM)
No of Hedge Funds: 106
Total Value of Hedge Fund Holdings: $11 Billion
Salesforce.com Inc is an American cloud-based company considered as the number one platform that’s bringing artificial intelligence to everyone. The company provides customer relationship management (CRM) service and also a complementary suite application that focuses on customer services and alike.
Salesforce.com, inc. (NYSE:CRM) was in 106 hedge funds’ portfolios at the end of the third quarter of 2020.
The total fiscal 2020 revenue of the company was $17.1 billion which is up 29% year-over-year and 29% in constant currency. Polen Capital talked about CRM in its Q3 investor letter. Here is what they said:
“We think Salesforce.com is a good example of a dynamic we are seeing in this “new normal.” Today, our software businesses that are almost entirely cloud-based and subscription revenue models are proving to be highly resilient even in difficult economic times. In fact, across our software holdings, we are seeing extremely high retention rates and continued robust revenue growth even through the pandemic and recession.
We typically speak of the balance of growth and safety that we seek in our Portfolios. In the past, the safety-like holdings were slower growth and more consumer or healthcare-oriented businesses.
Much of this is because cloud subscription businesses, by nature, are more stable and recurring so long as the underlying services being provided remain mission critical to customers, which is exactly the point. Software businesses often already had network effects and monopoly or oligopoly like market structures in place. The subscription model can add the additional benefits of more stability through economic cycles and less piracy. We believe combining mission critical offerings with highly recurring business models can make these companies “new safeties.”
Click to continue reading and see the 5 best blue chip stocks to buy now.
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Disclosure: None. 15 Best Blue Chip Stocks to Buy Now is originally published at Insider Monkey.
