In this article, we discuss the top 10 blue-chip stocks to buy in 2022.
Blue-chip stocks are ones instantly recognized as established, dominant names in their respective industries. Take Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and The Coca-Cola Company (NYSE:KO), for example. These are industry giants with dependable business models, and their products/services have passed the test of time. These firms have strong track records when it comes to delivering value to shareholders, and boast market caps in the billions. Not just that, most of these firms offer dividend payments, which protect investors’ money during times of low capital gains.
Therefore, these stocks are safe bets given their ability to manage well during economic uncertainty. Since these are market leaders with large resources, they provide steady albeit moderate growth potential and are sure to multiply your money a few years down the line.
The Dow Jones Industrial Average, an index which tracks 30 blue chip stocks listed in the US, gained 18.7% in 2021, as compared to the 23.21% gain posted by the S&P MidCap 400 index, and the 25.27% growth recorded by the S&P SmallCap 600 index. Over the last three years, the Dow Jones Index has posted 55.77% in returns, as compared to the 70.89% and 65.89% returns posted by the MidCap 400 and SmallCap 600 indexes respectively.
But why would now be a good time to invest in blue-chip stocks? The US Federal Reserve has raised interest rates for the first time in more than 3 years, with a 0.25 percentage point rate hike. It has also decided to increase interest rates a further 6 times during 2022. The Russian invasion of Ukraine has already put global financial markets into a state of nervousness. Oil prices are hovering near record valuations, and all this exaggerates the element of risk inherently present in any investment. Therefore, it might be a wise bet to consider bolstering your portfolio with some blue chip stocks.
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Our Methodology
We picked 10 blue-chip stocks with positive analyst ratings and growth catalysts in the near term. Hedge fund sentiment around each stock has been derived from Insider Monkey’s database of 924 elite hedge funds and is provided to give readers better context for their investment choices.
Top 10 Blue Chip Stocks to Buy in 2022
10. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 42
Defense stocks have been in the limelight ever since Russia invaded Ukraine, and Lockheed Martin Corporation (NYSE:LMT) is arguably the biggest name in the industry. The firm has worked on high-level contracts with the United States government for decades, and with a market cap of $122.18 billion, is one of the best blue chip stocks to buy in 2022.
On March 14, Germany announced plans to buy as many as 35 F-35 stealth fighter jets from Lockheed Martin Corporation (NYSE:LMT) to replace its ageing fleet of Tornado aircraft. The European nation recently announced a $112 billion budget to upgrade its military after the heightened conflict in Ukraine.
Wolfe Research analyst Michael Maugeri on February 28 upgraded Lockheed Martin Corporation (NYSE:LMT) to ‘Outperform’ from ‘Peer Perform’ and set a $467 price target. The analyst noted that the defense sector is poised to see growth in the coming months as military budgets around the world see hikes amid the Russian invasion of Ukraine. He is bullish on Lockheed Martin Corporation (NYSE:LMT) owing to its large exposure in the global market and the growing demand for its aeronautics products.
Out of all the hedge funds tracked by Insider Monkey, 42 were long Lockheed Martin Corporation (NYSE:LMT) in the fourth quarter, with combined holdings worth $976.1 million. D E Shaw held the biggest stake in Lockheed Martin Corporation (NYSE:LMT) during Q4 2021, comprising of 482,000 shares worth $171.4 million and representing a 59% increase in holding over the preceding quarter.
For the fourth quarter, Lockheed Martin Corporation (NYSE:LMT) posted an EPS of $7.24, exceeding estimates by $0.10. Quarterly revenue stood at $17.73 billion, outperforming analysts’ forecasts by $71.71 million and representing a 4.09% jump from the year-ago quarter.
RiverPark Advisors, LLC talked about Lockheed Martin Corporation (NYSE:LMT) in its Q4 2020 investor letter. The fund said:
“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and The Coca-Cola Company (NYSE:KO), Lockheed Martin Corporation (NYSE:LMT) is a blue chip stock on the radar of investors.
9. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 48
General Dynamics Corporation (NYSE:GD) is another defense company working with the US government on a range of military equipment, such as missiles, nuclear-powered submarines, rockets and tanks. The firm stands to benefit from the rise in geopolitical uncertainty around the world, and with a proven track record spanning decades delivering military products to the American government, is a top blue chip stock to buy in 2022.
On March 7, Wells Fargo analyst Matthew Akers maintained an ‘Overweight’ rating on General Dynamics Corporation (NYSE:GD) shares, and raised the price target to $282 from $235. The analyst sees the firm’s valuation likely remaining high for some time to come as the Russia-Ukraine crisis unfolds. As of March 17, shares of General Dynamics Corporation (NYSE:GD) have gained 28.60% in the last 12 months, and 19.16% in the last 6 months.
On March 2, General Dynamics Corporation (NYSE:GD) declared a quarterly dividend of $1.26 per share, representing a 5.9% increase from its prior dividend of $1.19. This marked the 25th consecutive year of annual dividend increases by the firm. As of March 17, it offers a dividend yield of 2.19%.
According to the database of hedge funds tracked by Insider Monkey, 48 hedge funds reported owning stakes in General Dynamics Corporation (NYSE:GD) in the fourth quarter with a combined value of $7.18 billion. This shows an upward trend from the quarter before, were 36 hedge funds held positions worth $6.71 billion in the firm. In the fourth quarter, Longview Asset Management held more than 30 million shares of General Dynamics Corporation (NYSE:GD) with a value of $6.26 billion, making it the top shareholder of the firm.
Investment firm Oakmark Funds mentioned General Dynamics Corporation (NYSE:GD) in its Q1 2021 investor letter, stating:
“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer term view, the company’s business jet franchise should benefit from a multi-year investment program in new, differentiated product. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp up in revenue related to next generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 62
The semiconductor industry is expected to reach new heights in the coming years, and the rapid digitization of the world is already pushing the boundaries of semiconductor manufacturing. Broadcom Inc. (NASDAQ:AVGO) is a big name in the semiconductor space and ranks among the top blue-chip stocks to buy in 2022 with a market cap of $242.01 billion.
On March 4, analyst William Stein of Truist kept his ‘Buy’ rating on Broadcom Inc. (NASDAQ:AVGO) stock, and raised the price target to $686 from $659, citing the firm’s Q4 earnings beat leading to improving EBITDA and EPS. He notes that sales growth is re-accelerating to 20% in the near term, which offers ‘even more confidence’.
Reporting its Q4 earnings on March 3, Broadcom Inc. (NASDAQ:AVGO) announced earnings per share of $8.39, which came in above consensus estimates by $0.24. Revenue for the quarter was recorded at $7.71 billion, above analysts’ forecasts by $99.60 million, and signaling a 15.79% jump year-on-year.
Hedge fund sentiment was up on the semiconductor manufacturer, with 62 hedge funds holding stakes in Broadcom Inc. (NASDAQ:AVGO) in the fourth quarter, as compared to 50 hedge funds in the previous quarter.
Investment firm Richie Capital Group talked about Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter. Here’s what the fund had to say:
“Broadcom (AVGO – up 36.5%) – The semiconductor device manufacturer reported an outstanding Fiscal Q4. Results (and guidance) exceeded Wall Street analyst expectations, and the company raised its dividend by 14% and announced a new stock-repurchase program. Semiconductor related revenue grew 17% while software revenue grew 8%. On the negative side, it was rumored that Apple, their largest customer, is making plans to develop their own wireless chips. This would be a blow to Broadcom. However, AVGO has a $15 billion contract with Apple that is good through 2023 and includes radio frequency parts such as amplifiers, filters and switches.”
7. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 67
The Procter & Gamble Company (NYSE:PG) makes and sells branded consumer products around the globe, including beauty, health care, grooming, baby care, and feminine products. Based in Ohio, P&G is a dominant name in the international arena and is not as prone to market volatility given its vast portfolio of consumer goods. The firm has grown its dividend payout for 65 years in a row and offers a healthy 2.32% yield as of March 17.
On January 20, analyst Dara Mohsenian of research firm Morgan Stanley reiterated an ‘Overweight’ rating on The Procter & Gamble Company (NYSE:PG) stock and upped the price target to $177 from $161. The analyst sees P&G as their top pick in the Household Products segment and expects sustained revenue growth for the firm. On March 16, Deutsche Bank analyst Steve Powers maintained a ‘Buy’ rating on The Procter & Gamble Company (NYSE:PG) shares with a revised price target of $173 from $179.
In the fourth quarter, The Procter & Gamble Company (NYSE:PG) posted an EPS of $1.66, outperforming estimates by $0.01. Revenue for the fourth quarter came in at $20.95 billion, which was up 6.12% year-over-year and exceeded estimates by $617.36 million.
In the fourth quarter of 2021, 67 out of 924 elite hedge funds tracked by Insider Monkey held stakes in The Procter & Gamble Company (NYSE:PG) with a combined value of $6.61 billion. GQG Partners was the top shareholder of The Procter & Gamble Company (NYSE:PG) in the fourth quarter, with a position consisting of 7.53 million shares worth $1.23 billion.
On March 8, The Procter & Gamble Company (NYSE:PG) announced the suspension of all new capital investments in Russia after its attack on Ukraine and reduced its product portfolio in the country to focus solely on basic hygiene, health, and personal products.
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 70
Up next is The Coca-Cola Company (NYSE:KO), a household name around the world that deals in the sale of soft drink beverages. It has raised its dividend payout for 60 consecutive years and offers a 2.93% yield as of March 17. Investors have long relied on The Coca-Cola Company (NYSE:KO) for stability and growth during good times and bad, and Warren Buffett is among the most prominent shareholders of the firm. His Berkshire Hathaway has built its position in the company for decades and is currently its largest shareholder with 400 million shares valued at $23.68 billion.
In total, 70 hedge funds reported holding stakes in The Coca-Cola Company (NYSE:KO) in the fourth quarter, with combined holdings of $28.61 billion. This is up from 61 hedge funds in the preceding quarter with positions worth $25.13 billion in the Atlanta-based firm.
On February 8, Morgan Stanley analyst Dara Mohsenian kept an ‘Overweight’ rating on The Coca-Cola Company (NYSE:KO) shares and raised the price target to $71 from $65. In the short term, Mohsenian expects an above-consensus post-Covid sales and earnings recovery from Coke, and in the longer-term, he forecasts a return to pre-Covid ‘outsized’ sales growth and better margin performance than peers. On February 15, Evercore ISI analyst Robert Ottenstein maintained an ‘Outperform’ rating on The Coca-Cola Company (NYSE:KO) shares, and raised the price target to $70 from $63, noting that the firm continues to improve its long-term outlook and business model.
The Coca-Cola Company (NYSE:KO) posted an EPS of $0.45 for Q4 2021, outperforming estimates by $0.04. Quarterly revenue was recorded at $9.47 billion for the fourth quarter, exceeding analysts’ forecasts by $579.32 million and representing a 10.08% jump from the year-ago quarter.
In addition to Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT), The Coca-Cola Company (NYSE:KO) is an exciting blue-chip stock to buy in 2022.
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 71
Founded in 1870, Exxon Mobil Corporation (NYSE:XOM) is a Texas-based oil company that ranks next on our list of the best blue-chip stocks to buy in 2022. Energy prices are soaring since the Russian invasion of Ukraine, and as the second-largest oil company in the world, Exxon Mobil Corporation (NYSE:XOM) is expected to remain one of the most comfortable stocks for investors. The firm has grown its dividend payments for 38 years in a row and offers a healthy yield of 4.46% as of March 17.
Investors are eager on Exxon Mobil Corporation (NYSE:XOM) shares, with 71 hedge funds being bullish on the company shares in the fourth quarter, with a combined value of $5.38 billion. In comparison, 64 hedge funds held positions in Exxon Mobil Corporation (NYSE:XOM) in the third quarter. GQG Partners was the top shareholder in the Texas firm, holding 32.4 million shares worth $1.98 billion in the fourth quarter, signaling a 22% increase in holding over the preceding quarter.
On March 3, BMO Capital analyst Phillip Jungwirth kept a ‘Market Perform’ rating on Exxon Mobil Corporation (NYSE:XOM) shares and raised the price target to $86 from $73. Jungwirth noted that although the firm reaffirmed many of the same financial targets on their Investor Day, he sees the company well-positioned to drive further operating cost and capital efficiency gains. This and an ‘industry-leading pipeline of projects will contribute to strong earnings and cash flow growth, according to the BMO Capital analyst. As of March 18, shares of Exxon Mobil Corporation (NYSE:XOM) have surged 39.02% in the last 12 months, and 47.10% in the last 6 months.
In the fourth quarter of 2021, Exxon Mobil Corporation (NYSE:XOM) posted an EPS of $2.05, which exceeded consensus estimates by $0.11. Revenue for the quarter was recorded at $84.97 billion, beating analysts’ estimates by $6.24 billion and recording an increase of 82.56% year-on-year.
Investment firm Saturna Capital discussed Exxon Mobil Corporation (NYSE:XOM) in its Q4 2021 investor letter. The fund said:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
4. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 83
Pfizer Inc. (NYSE:PFE) has been in the limelight since it manufactured one of the earliest Covid-19 vaccines approved by the United States government. The firm made approximately $36 billion in vaccine sales alone in 2021 and has also seen its Paxlovid oral pill for Covid-19 approved by the FDA. Founded in 1849, Pfizer Inc. (NYSE:PFE) is behind a range of well-known pharmaceutical products and pays a solid dividend of 2.95% to shareholders as of March 18.
On March 17, the United Nations-backed Medicines Patent Pool (MPP) announced that 35 generic drug-making firms around the world will manufacture cheap versions of Pfizer Inc.’s (NYSE:PFE) Paxlovid oral pill, which will be supplied to 95 low-income countries across the globe, or roughly 53% of the world population.
Pfizer Inc. (NYSE:PFE) reported earnings per share of $1.08 for the fourth quarter, which beat consensus estimates by $0.21. Revenue for Q4 stood at $23.84 billion, which was up 104.02% year-on-year but fell below estimates by $362.61 million.
Out of all the hedge funds tracked by Insider Monkey, 83 reported holding positions in Pfizer Inc. (NYSE:PFE) during the fourth quarter, as compared to 74 hedge funds in the previous quarter. This shows increasing investor confidence in the drug-making firm.
ClearBridge Investments discussed many stocks in its Q1 2021 investor letter, and Pfizer Inc. (NYSE:PFE) was one of them. Here’s what the fund said:
“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold Pfizer in late 2020, in the health care sector.”
3. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is a blue-chip stock that also counts as a dividend aristocrat, having increased its dividend payment for 59 consecutive years. Founded in 1886 and based in New Jersey, the firm offers healthcare and pharmaceutical products around the globe. As of March 18, its dividend yield stands at 2.40%.
BofA analyst Geoff Meacham reinstated coverage of Johnson & Johnson (NYSE:JNJ) on March 2 with a ‘Neutral’ rating and a $185 price target. He is positive about the firm’s near-term growth prospects, as well as its ‘safe haven’ status given the current macro and geopolitical environment.
In the fourth quarter, Johnson & Johnson (NYSE:JNJ) posted an EPS of $2.13, outperforming estimates by $0.01. Revenue for Q4 stood at $24.80 billion, an increase of 10.36% in comparison to the year-ago quarter, but below analysts’ estimates by $485.39 million.
83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ) at the end of the fourth quarter, with a combined value of $7.38 billion. Fundsmith LLP was the leading shareholder in Johnson & Johnson (NYSE:JNJ) during the fourth quarter, holding 7.21 million shares worth $1.23 billion.
Here’s what Distillate Capital had to say about Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 262
Microsoft Corporation (NASDAQ:MSFT) offers computer hardware and software solutions around the globe. Out of the 924 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021, 262 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT), with a combined worth of $75.66 billion. This shows improving investor confidence in Microsoft over the previous quarter, where 250 hedge funds had bullish bets on the company shares.
On February 8, Morgan Stanley analyst Keith Weiss maintained an ‘Overweight’ rating on Microsoft Corporation (NASDAQ:MSFT) stock, and set a price target of $372, noting that Microsoft shares remained a ‘strong buy at current levels’. As of March 18, Microsoft Corporation (NASDAQ:MSFT) shares have jumped 29.29% in the last 12 months, and 1.39% in the last 6 months.
Reporting its fourth quarter earnings on January 25, Microsoft Corporation (NASDAQ:MSFT) disclosed earnings per share of $2.48, which exceeded estimates by $0.16. $51.73 billion in quarterly revenue was an increase of 20.09% year-over-year, and $938.45 million above analysts’ forecasts.
Here is what Saturna Capital had to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Only two companies remain from 2010’s top 10 list: Apple and Microsoft. Going back to 2000, only Microsoft remains. We expect that Microsoft Corporation (NASDAQ:MSFT) will maintain its position as the dominant global provider of personal and business software, while growing its cloud business and potentially being a key provider of augmented and mixed hardware and software.
US Technology companies have been the equity market’s biggest winners in recent years. Because of the Amana Income Fund’s objective of current income, many of these zero- or low-dividend companies do not suit the Fund’s mandate. One that does — Microsoft Corporation (NASDAQ:MSFT), which returned 46.03% for 2021 — was the Fund’s second biggest contributor to returns during the year. While Technology no doubt underpins much of the current economy and its future potential, Tech stocks have also benefited from low inflation, globalization, and valuations that are near historic highs. With globalization backsliding and inflation worries escalating, we believe companies in other industries with strong financial positions, competitive advantages, strong management, attractive dividend yields, and reasonable valuations can offer investors diversification in the context of equity markets increasingly concentrated in a handful of very large Technology firms.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 279
Amazon.com, Inc. (NASDAQ:AMZN) ranks first on our list of the best blue-chip stocks to buy in 2022, and hedge fund sentiment is a testament to the stock’s dependability and bullish trajectory. 279 hedge funds held positions in Amazon.com, Inc. (NASDAQ:AMZN) as of the end of the fourth quarter of 2021, the most of any stock tracked by Insider Monkey. In the quarter before, 242 hedge funds were bullish on the company shares.
On March 17, Amazon.com, Inc. (NASDAQ:AMZN) announced that it had closed an $8.5 billion deal to buy film studios MGM, which is behind popular hits including the James Bond franchise. The second-largest acquisition made by Amazon.com, Inc. (NASDAQ:AMZN) will add more than 4,000 film titles to its Prime Video streaming service.
Deutsche Bank analyst Lee Horowitz initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) with a Buy rating on March 10, and set a price target of $4,100. Horowitz believes that Amazon stock presents a highly compelling risk/reward at current levels, and that the market is under-appreciating potential upside associated with the firm’s retail revenue, multi-channel grocery share gains, and Amazon Web Services.
Amazon.com, Inc. (NASDAQ:AMZN) reported earnings per share of $27.75 in the fourth quarter, outperforming consensus estimates by $24.09. $137.41 billion in revenue for the fourth quarter was up 9.44% year-over-year but fell below analysts’ forecasts by $173.16 million.
Weitz Investment Management talked about Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2021 investor letter. The fund said:
“Several “platform” companies thrived during COVID and have been very strong stocks. In 2021, their businesses continued to thrive, though their stock prices cooled off. Amazon continues to steamroll the competition and grow rapidly, but its stock ended the year about where it began.”
You can also take a look at Top 15 Dividend Stocks With Upside Potential and 15 Biggest Petrochemical Companies In The World.
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Disclosure. None. Top 10 Blue Chip Stocks to Buy in 2022 is originally published on Insider Monkey.
