Blue-chip stocks offer investors equity in established, financially sound firms with strong reputations. They’re generally market leaders and tend to be household names familiar to those outside the investing world. In short, they’re likely to provide returns to investors in almost every case.
Blue-chip stocks often include dividends and are known for reliable earnings. That suggests moderate growth for the most part and not explosive profits. However, 2023 has shown that even the largest publicly traded firms can see their stock price increase rapidly. These companies offer that same potential and could certainly experience explosive growth. The base case is steady, reliable profitability and dividend income.
Apple (AAPL)
Apple (NASDAQ:AAPL) stock has firmly established itself as among the most reliable tech investments. It was the go-to big tech investment for capital preservation during the 2022 downturn. Investor belief in the firm remained strong as growth stocks suffered last year. The ubiquity of the iPhone arguably made that so.
In any case, Apple represents safety and is the largest firm in the world by market capitalization. Investors know that it’s a safe place to place tech money during a downturn and expect that it will rebound well in those instances.
That notion is precisely why KeyBanc analysts believe Apple share prices won’t slow down even as consumers weaken. Apple’s elevated multiple is justified, in their opinion, due to safety and excitement around the Apple Vision Pro VR headset. At $3,499, it could spike revenues when it’s released in early 2024. Apple isn’t stopping at a $3 trillion market cap. Many pundits expect Apple to reach $5 trillion before 2030, which should result in ever higher share prices.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) stock remains muted despite massive growth. The fact that MercadoLibre shares continue to trade for $1,150 is a great opportunity because there is clear explosive growth potential. Perhaps nothing indicates that truth more than that MELI stock’s consensus target price is $1,563.
There’s a strong case to be made that it’s simply a matter of time before prices shoot upward. The Latin American eCommerce firm dominates its geography. It is the equivalent of Amazon for customers in Latin America and continues to grow rapidly. This makes it one of those top blue-chip stocks.
Revenues increased by 58% during the most recent quarter, reaching $3.0 billion. Simply put, a few firms with the company’s reach and size are growing at similar rates. Additionally, MercadoLibre is profitable, with a net income that more than tripled year-over-year in Q1, reaching $201 million. The company dominates eCommerce from Mexico to Argentina and its incredible growth sets the stage for explosive profits moving forward.
AMD (AMD)
AMD’s (NASDAQ:AMD) AI chips could disrupt those from its biggest rival. That hasn’t been the case thus far. Instead, Nvidia (NASDAQ:NVDA) has amassed a giant lead, but AMD is perceived to be the strongest challenger to Nvidia’s AI chip throne.
AMD’s AI chips are currently estimated to be 80% as fast as those from Nvidia. Intel (NASDAQ:INTC) is also considered to be in the running but has slipped significantly of late overall. That implies that Intel has probably fallen back farther behind AMD.
MosaicML’s assessment of AMD’s AI chips is most important for AMD. Research from the company pegs AMD’s chips at 80% as fast as Nvidia’s. CEO Hanlin Tang notes that AMD has done exceptionally well on the software side, which has proven to be an Achille’s heel for companies.
MosiacML expects AMD to continue closing the gap that exists between it and Nvidia. As that happens, AMD shares will continue to have explosive upside potential.
Visa (V)
Visa (NYSE:V) stocks’ potential for explosive profits lies in an ugly truth underpinning the American consumer. Americans’ credit card debt has eclipsed the $1 trillion mark. The average interest rates on a new card are 24%. Put those factors together, and it’s easy to see why Visa has a lot of potential at the moment.
I think it’s the most important factor for Visa and other credit card companies right now. Visa’s earnings report touted resurgent travel and cross-border payment volumes for a strong first quarter. While those factors certainly matter, I believe Visa’s bigger opportunity will be born out of the current era. High-interest rates will equate to strong future cash flows for the firm as Americans overextend themselves en masse. There’s a price to be paid, and Visa investors stand to benefit from it.
Additionally, Visa offers income through its dividend with a modest yield of 0.74%. It’s part of those top blue-chip stocks you should have your eye on.
Wingstop (WING)
Wingstop (NASDAQ:WING) has emerged as a great growth story as America’s recent chicken obsession continues. The stock is definitely one to watch due to its continuing growth potential.
The company has a long track record of same-store sales growth for the last 19 years. Same-store sales growth increased by 20.1% during the first quarter, meaning there’s plenty of growth left. The company recently opened its 2,000th restaurant globally and is on a mission to open 7,000 restaurants.
There continues to be room for global expansion for Wingstop. It finished the first quarter with 243 international restaurants and 1,996 restaurants overall. System-wide sales, which tallies all sales for company-owned and franchised restaurants, increased by 30.4% during the quarter reaching $821.6 million. Revenues increased by 42.7% to $108.7 million(1). Wingstop reminds me of Chipotle (NYSE:CMG) in that people underestimate how valuable their shares can be.
Walmart (WMT)
Walmart (NYSE:WMT) probably isn’t a blue-chip stock that can explode particularly quickly. It carries a beta of 0.50, implying that it will continue to move more slowly than the stock market. Nevertheless, it does have explosive upside potential because the world’s largest retailer is chipping away at its nearest competitor’s strength.
Amazon (NASDAQ:AMZN) is the second-largest global retailer and the largest eCommerce firm, with $513 billion in 2022 revenues. Walmart reported roughly $60 billion more in 2022 sales.
Here’s the point: Walmart is steadily chipping away at Amazon’s eCommerce dominance with eCommerce revenues that increased by 26% in the first quarter. Walmart may never become bigger than Amazon in eCommerce, but the company has a knack for using its power to carve out significant positions in markets it enters. The firm opened its first full grocery store in 1988 and was the largest grocer within a few decades.
Realty Income (O)
Realty Income (NYSE:O) operates a leasing business focused on convenience store retail properties that provide a reliable income for investors. It is a REIT stock meaning it is legally obligated to return 90% of its income to investors.
I’d argue that most of Realty Income’s upside lies therein. It provides a strong dividend income yielding more than 5%. That said, O stock does have roughly 15% upside based on analysts’ average target price. The firm leases commercial space. That’s a potential red flag as many have grown concerned about the commercial real estate sector. However, the company leases to large, stable firms like Walgreens and 7-Eleven, not riskier areas like office space. This is why it’s one of those top blue-chip stocks.
What I particularly like about Realty Income is that the firm has grown faster than the market overall over the past decade. That doesn’t factor in the dividend meaning actual returns are much higher. Realty Income is explosively profitable over the long term and shouldn’t be overlooked.
On the date of publication, Alex Sirois did not have (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.
