Christmas has come early on Wall Street thanks to the U.S. Federal Reserve. The central bank’s last interest rate decision of 2023 delivered everything investors wanted to hear. The Fed held its benchmark interest rate steady in the 5.25% to 5.50% range and forecast three interest rate cuts in 2024. All three major U.S. stock averages closed at fresh 52-week highs after the announcement, with the blue-chip Dow Jones Industrial Average closing above 37,000 for the first time and entering record territory. Top blue-chip stocks have continued to rise since the Fed’s rate decision on Dec. 13, making now an opportune time for investors to jump back into the market with both feet. Here are three blue-chip stocks you’ll regret not buying soon: December edition.
Costco Wholesale (COST)
Current shareholders of Costco Wholesale (NASDAQ:COST) are being rewarded with a special cash dividend of $15 that’s payable on Jan. 12. It’s the fifth special dividend to be paid by Costco in the past 11 years. In addition to the special dividend, Costco pays a regular quarterly dividend of $1.03 per share to stockholders, yielding 0.65%. The dividend payments are just one reason to buy this top blue-chip stock.
The special dividend payment was announced along with Costco’s latest financial results. The grocery retailer reported earnings per share (EPS) of $3.58 for its fiscal first quarter. That beat Wall Street forecasts of $3.41. Costco’s revenue was $57.80 billion, which aligned with expectations. However, same-store sales rose 3.8% from a year earlier and e-commerce sales increased 6.3%, driven by strong demand during the Thanksgiving weekend, including Black Friday and Cyber Monday.
Costco added 72 million paid household members during its fiscal Q1, up 7.6% from a year earlier. The company opened 10 new locations during the quarter with plans to open 33 more locations over the coming fiscal year. This was the last quarterly print of long-time Costco chief executive officer (CEO) Craig Jelinek, who is retiring. Chief Operating Officer (COO) Ron Vachris will succeed Jelinek on Jan. 1 in what is expected to be a seamless transition. COST stock has gained 45% in 2023 and is up 239% since 2018.
Lennar (LEN)
Lennar (NYSE:LEN), one of the biggest American home builders, has also just issued financial results that topped Wall Street forecasts despite a housing market that high interest rates have challenged. The company reported EPS of $4.82 and revenue of $11 billion for its fiscal Q4. Analysts had been looking for earnings of $4.59 and $10.20 billion in revenue. For the entire fiscal year, Lennar announced earnings of $13.73 a share on $34.20 billion in revenue. Both full-year figures also beat forecasts.
Higher interest rates charged on home mortgages continue to cool the housing market, said Lennar in its earnings print. There is good news on the horizon after the U.S. Federal Reserve signaled three interest rate cuts in 2024, which should lower mortgage rates in the year ahead. The average 30-year fixed rate mortgage in the U.S. fell below 7% recently, dropping to 6.95%, its lowest level in months. Lennar said its new orders rose 32% from a year earlier in the latest quarter, while deliveries were up 19%.
LEN stock is up 62% this year and has gained 283% over five years.
Darden Restaurants (DRI)
Darden Restaurants (NYSE:DRI) has reported quarterly financial results that beat Wall Street estimates and raised its forward guidance. The company that owns the Olive Garden and LongHorn Steakhouse restaurant chains announced EPS of $1.84 versus the $1.74 that had been expected. In the company’s fiscal Q2, revenue amounted to $2.73 billion compared to $2.74 billion that was forecast among analysts. Darden’s sales were up 9.7% from a year earlier.
The company attributed the earnings beat to including Ruth’s Chris Steak House locations in its earnings for the first time. Darden acquired Ruth’s Hospitality Group, owner of Ruth’s Chris Steak House, in June of this year. Olive Garden’s same-restaurant sales increased 4.1%, while LongHorn Steakhouse saw 4.9% growth during the quarter. The company also updated its fiscal year 2024 outlook, forecasting EPS of $8.75 to $8.90, up from previous guidance of $8.55 to $8.85 per share. Darden also said it expects $11.5 billion in sales for its current fiscal year.
DRI stock is up 16% in 2023 and climbing, making it one of the best blue-chip stocks. Through five years that included the Covid-19 pandemic shutdown, Darden’s stock is up 65%.
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.
