Most investors agree that finding a brilliant blue-chip stock can do wonders for a portfolio. Knowing that stock in a large, well-capitalized, reputable company gives investors some sense of calm.
Blue-chip companies have been in business for significant years, have reliable earnings, plenty of free cash flow, and tend to pay dividends to stockholders. Prime examples of blue-chip stocks include Walmart (NYSE:WMT), McDonald’s (NYSE:MCD) and Johnson & Johnson (NYSE:JNJ). These can anchor a portfolio and tend to be more reliable and less volatile than stocks of start-up companies and more speculative investments.
Blue-chip stocks might not rise much during a bull market. But they also don’t fall as much when Wall Street gets mauled by a bear. For buy-and-hold investors, blue-chip stocks should form the foundation of their portfolio, especially when investing conservatively for retirement or a college education. Let’s examine three brilliant blue-chip stocks for lucrative, long-term growth.
CAVA Group (CAVA)
Having only gone public just one month ago, Mediterranean restaurant chain CAVA Group (NYSE:CAVA) is off to a promising start. Some analysts are even likening it to blue-chip growth name Chipotle Mexican Grill (NYSE:CMG).
Since its initial public offering (IPO) in mid-June, CAVA stock has gained 20%. The company shocked markets by reporting a profit in its first earnings report as a public traded concern.
CAVA stock vaulted 12% higher on news of the profit and currently has a market valuation to $5.18 billion. Cava stunned analysts by announcing Q2 net profit of $6.5 million or 21 cents a share. This is up from a net loss of $8.2 million or $6.23 a share a year prior. Revenue in the quarter totaled $172.9 million, a 6% increase from $163 million last year. CAVA Group opened 16 new restaurants during Q2, bringing its total to 279 locations. Impressively, same-store sales increased nearly 20% in the quarter.
Already profitable and with a successful IPO under its belt, CAVA Group looks like a brilliant blue-chip stock. It may indeed become the next Chipotle.
Molson Coors (TAP)
Sticking with the food and beverage theme, brewer Molson Coors (NYSE:TAP) is enjoying a resurgence coming out of the pandemic. Sales are surging as we head into football season.
The U.S.-Canadian brewing giant also reported stunning Q2 results, with its net income rising 624% from a year earlier to $342.4 million. This was mostly because of a big spike in beer sales. With restaurants, bars, and stadiums back to full capacity, Molson Coors’ sales of beer brands such as Miller Lite and Molson Canadian are soaring through the roof.
Q2 sales totaled $3.3 billion, up 14% from $2.9 billion in Q2 of 2022. The company recorded its best U.S. sales growth since 2008 and also saw major sales increases in Canada and the UK. Looking ahead, Molson Coors raised its forward guidance, saying it now expects an increase in profits this year of 23% to 26%. This represents an up from a previous forecast of growth in the low single digits. TAP stock has risen nearly 30% year to date, making it a great long-term blue-chip pick.
Starbucks (SBUX)
Finally, the final pick is retail coffee chain Starbucks (NASDAQ:SBUX). A current buy-the-dip opportunity exists because stock is down a slight 2% on the year.
Long-term, Starbucks has proven to be a brilliant blue-chip winner with a share gain of 86% over the last five years. The company, which sells an average of eight million cups of coffee a day, continues to perform strongly in North America. However, it does face some headwinds in its second biggest market of China, whose economy is slowing down.
Starbucks reported earnings per share (EPS) of $1 versus 95 cents had been expected in Q2 of this year. Operating margins grew to 17.3% from 15.9% a year earlier, driven by higher prices for its lattes and scones. However, the company’s revenue in the quarter fell short of consensus forecasts at $9.17 billion compared to the anticipated $9.29 billion. Same-store sales growth of 10% also fell short of estimates for 11%. Also, ongoing unionization efforts by U.S. employees are weighing on the share price. But over the long haul, SBUX stock should be fine.
On the date of publication, Joel Baglole 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.
