In this article, we talk about the 5 best blue chip stocks to buy right now. In order to read our detailed analysis of the current market situation, go directly to 11 Best Blue Chip Stocks To Buy Right Now.
5. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 58
McDonald’s Corporation (NYSE:MCD) is one of the most well-known brands around the world. One research study has found that McDonald’s iconic golden arches logo is recognized by more people around the world than the Christian cross. McDonald’s also ranks as a Dividend Aristocrat stock, with a 2.18% yield as of July 1 and an impressive 46-year history of increasing dividends under its belt.
On June 29, Atlantic Equities analyst Edward Lewis upgraded McDonald’s Corporation (NYSE:MCD) to ‘Overweight’ from ‘Neutral’ with a $278 price target. The company offers a defensive value play with its leadership in the global quick-service restaurant (QSR) space, according to the analyst, who appreciates the firm’s resilient business model and its vast experience managing through difficult economic periods.
58 hedge funds were bullish on McDonald’s Corporation (NYSE:MCD) at the end of the first quarter with aggregate positions worth $2.73 billion. This is up from 57 hedge funds in the preceding quarter. Jim Simons’ Renaissance Technologies was the biggest shareholder of McDonald’s Corporation (NYSE:MCD) in the first quarter, with a stake worth nearly $626 million.
4. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 64
When the market is butchering stocks left and right, The Coca-Cola Company (NYSE:KO) presents a safe haven for investors. The beverage-maker has increased its dividends for almost 6 decades, a testament to its global presence, robust earnings, pricing power and strong brand loyalty. It offers a 2.73% dividend yield as of July 1, and has climbed 19.49% in the last 12 months.
At the end of the first quarter of 2022, Warren Buffett’s Berkshire Hathaway held 400 million shares of The Coca-Cola Company (NYSE:KO) priced at $24.79 billion, making it the firm’s biggest shareholder. In total, 64 hedge funds were bullish on the company shares with aggregate stakes worth $29.17 billion.
Morgan Stanley analyst Mike Wilson recently named The Coca-Cola Company (NYSE:KO) among the list of companies that can upwardly revise their earnings guidance in 2023, despite fears of an incoming recession. He thinks there’s a 29% upside potential to the shares at current levels, and gave the stock an ‘Overweight’ rating.
Investment management firm ClearBridge Investments mentioned The Coca-Cola Company (NYSE:KO) in its fourth-quarter 2021 investor letter. Here’s what they 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.”
3. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 67
NIKE, Inc. (NYSE:NKE) is a sports goods manufacturer based in the United States. Due to slowing demand in China and ongoing supply chain disruptions, many analysts recently cut their price targets on Nike, but maintained positive ratings due to the company’s quarterly earnings beat, its long-term opportunity and position as the world’s leading sports company. The company’s 20-year streak of growing dividends also makes it one of the best blue chip stocks to buy, with a yield of 1.21% as of July 1.
On June 28, Morgan Stanley analyst Alex Straton maintained an ‘Overweight’ rating on NIKE, Inc. (NYSE:NKE) shares, and revised the price target to $149 from $159, noting that he keeps a bullish long-term view on the company despite recent gross margin pressure. Deutsche Bank analyst Gabriella Carbone and Wedbush analyst Tom Nikic also had ‘Buy’ and ‘Outperform’ ratings on NIKE, Inc. (NYSE:NKE) shares, respectively.
As of the end of the first quarter, 67 hedge funds reported ownership of stakes in NIKE, Inc. (NYSE:NKE), as compared to 68 hedge funds in the previous quarter. Fundsmith LLP was the leading Q1 shareholder of the athletic goods company, with a position consisting of 6.7 million shares valued at around $905 million.
Clearbridge Investments talked about the performance and future prospects of NIKE, Inc. (NYSE:NKE) in its Q4 2021 investor letter. Here is what it said:
“NIKE, Inc. (NYSE:NKE) is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. NIKE, Inc. (NYSE:NKE) is also still under indexed to the women’s category, which we see as a significant ongoing catalyst.”
2. Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 71
Goldman Sachs Group, Inc. (NYSE:GS) looks undervalued, with a P/E (price to earnings) ratio of 5.81. The recent Federal Reserve Stress Test showed that the banking firm also has one of the most impressive balance sheets of all the major banks in the United States.
On June 29, BofA analyst Ebrahim Poonawala upgraded Goldman Sachs Group, Inc. (NYSE:GS) to ‘Buy’ from ‘Neutral’ with a price target of $380, up from $360. The analyst did not attribute this upgrade to an improved outlook for bank stocks in general, but rather pointed to Goldman Sachs’ attractive relative risk/reward, and noted that he sees the bank as well-positioned to outperform within a deteriorating economic backdrop.
71 hedge funds were bullish on Goldman Sachs Group, Inc. (NYSE:GS) at the end of the first quarter, with a combined worth of $4.59 billion. In contrast, 75 hedge funds were stakeholders in the firm a quarter earlier. With a $1.12 billion position, Eagle Capital Management was the biggest shareholder of Goldman Sachs Group, Inc. (NYSE:GS) in the first quarter of 2022.
Ariel Investments talked about Goldman Sachs Group, Inc. (NYSE:GS) in its fourth-quarter 2021 letter to investors. Here is what was said:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. The Goldman Sachs Group, Inc. (GS) jumped +47.59% for the year and +1.73% in the quarter.”
1. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 88
Expedia Group, Inc. (NASDAQ:EXPE) is an online travel company based in Seattle, Washington. It recently featured in Goldman Sachs list of stable stocks that are well-positioned within the current financial climate.
It was given an unchanged ‘Overweight’ rating by Piper Sandler analyst Thomas Champion on June 28, who views the firm’s B2B opportunity as “compelling,” and sees the segment poised for continued strong growth to reach $5 billion in sales by 2027. The analyst lowered the price target to $155 from $225 to reflect the overall market volatility. JMP Securities analyst Nicholas Jones, with a ‘Market Perform’ rating, was positive on Expedia Group, Inc.’s (NASDAQ:EXPE) strategic focus on driving stronger consumer relationships with heavier app usage and a loyalty program, as the firm begins to drive stronger gains and stabilize its market share.
Investor sentiment was up on Expedia Group, Inc. (NASDAQ:EXPE) shares. At the close of Q1 2022, 88 hedge funds held $6.33 billion worth of positions in the travel company, up from 82 hedge funds in the previous quarter. Daniel Sundheim’s D1 Capital Partners held 7.61 million shares of Expedia Group, Inc. (NASDAQ:EXPE) worth $1.48 billion, making it the firm’s leading Q1 shareholder.
Here is what Aristotle Capital Management had to say about Expedia Group, Inc. (NASDAQ:EXPE) in its Q1 2022 investor letter:
“Expedia outperformed in the first quarter following a better-than-expected earnings report for the company’s fourth quarter of 2021. During the pandemic, the company reduced expenses which has improved operating leverage as revenue recovers. Expectations for travel in 2022 have improved as COVID cases have declined.”
You can also take a look at 15 Biggest Companies That Don’t Pay Dividends and 10 Best 5G Stocks To Buy Now.
