With the Dow Jones Industrial Average at a record high, blue-chip stocks look to be staging a roaring comeback. As this happens, investors should fortify their portfolios with the purchase of reliable blue-chip stocks that can be expected to outperform.
The good news is that many of the best blue-chip names are still available at attractive valuations. Some of the best-known blue chips are only just starting to rise. All after seeing their share price pushed lower during the bear market of 2022. How far they ultimately rise remains to be seen. But here are the best blue-chip stocks 2024: seven to add to your must-buy list.
General Electric (GE)
What a turnaround story. After years as an industrial albatross and value trap, General Electric (NYSE:GE) had its best year in nearly two decades in 2023, rising 90%. The reversal caught many investors off guard. But it’s not too late to take a position in GE stock. The shares were so beaten down that even with the rally over the past year, the stock is only trading at 14x earnings estimates.
The turnaround comes as General Electric has broken itself into three publicly traded companies. The first break-up occurred in January 2023 with the spinoff of GE HealthCare. General Electric’s energy business is being spun off into a new company called GE Vernova in 2024, with the remainder of the company to be renamed GE Aerospace. Although this plan was initially met with skepticism, it has proven to be the right strategy and helped to boost both General Electric’s earnings and GE stock.
Nike (NKE)
General Electric was the comeback story of 2023. But many analysts expect Nike (NYSE:NKE) to be one of the best blue-chip stocks to own in 2024, too. NKE stock has received upgrades from analysts ahead of its earnings report on Dec. 21. Analysts at Citigroup (NYSE:C), for one, upgraded Nike’s stock to a “buy” rating from “neutral” and raised their price target on the shares to $135. That implies 11% upside from current levels. The analyst upgrades come as Nike’s share price has gained 15% in the past month.
The analyst upgrades and share price appreciation come on expectations that Nike’s China business is rebounding and its inventories are normalizing after the COVID-19 pandemic. NKE is also expected to benefit in the coming year from lower freight costs, growth in its direct-to-consumer business, and improving margins. Nike’s sales are also expected to get a boost in 2024 from the product line that’s been created for the U.S. team that’s participating in the Paris Olympics.
NKE stock is up only 3% in 2023, but it’s clearly in the early innings of a sustained recovery.
Costco (COST)
Shares of Costco Wholesale (NASDAQ:COST) have been on a tear ever since the warehouse club issued a stellar earnings report. COST stock has gained 7% since its latest print and the share price is now up 16% over the past month. Year-to-date, the company’s stock has increased 50%. Sales and profits beat Wall Street forecasts, with its e-commerce sales rising 6.3% from a year ago. The company added 72 million paid household members during what was its fiscal Q1.
Investors who take a position in COST stock now can also take advantage of a special one-time dividend of $15 per share that the company is paying to shareholders of record on Jan. 12, 2024. This is the fifth special dividend to be paid by Costco in the last 11 years. Beyond the special dividend, Costco pays a regular quarterly dividend to stockholders of $1.03 a share. Costco is also going into 2024 with new leadership as chief operating officer Ron Vachris is scheduled to take over as CEO on Jan. 1.
Microsoft (MSFT)
Although its stock has increased 55% in 2023, Microsoft (NASDAQ:MSFT) hasn’t enjoyed the exponential growth that other companies have gotten from their exposure to artificial intelligence. Companies such as Nvidia (NASDAQ:NVDA) and C3.ai (NYSE:AI) have seen their share prices more than double as the hype surrounding AI hit a fever pitch.
The year ahead could see MSFT stock breakout as another one of the best blue-chip stocks of the new year. Analysts acknowledge that the company’s leading role in AI is not fully captured in its share price. As Microsoft begins to monetize artificial intelligence and it shows up in the company’s earnings, the stock should get a boost. Analysts at Oppenheimer have named Microsoft their “top large cap pick” for 2024, citing an expected revenue boost from AI. Oppenheimer has a “buy” equivalent rating on MSFT stock and a $410 price target, implying 10% upside.
McDonald’s (MCD)
It’s strange to think that a company approaching its 70th anniversary is in growth mode. But that’s the situation at quick service restaurant chain McDonald’s (NYSE:MCD). The company known for its burgers and fries just announced plans to open 10,000 new restaurant locations and add 100 million members to its loyalty rewards program.
The company is also testing 10 locations of a spin-off brand called “CosMc’s” that’s meant to appeal to teenagers and young adults. The first of the new CosMc’s stores is opening in Illinois this December. The aggressive expansion is aimed at boosting McDonald’s global sales and stock price. MCD stock is no slouch. The share price has increased 10% in 2023 and is up 67% over five years. But it has trailed the benchmark S&P 500 index, which has gained 25% this year and nearly 100% through five years.
The next year could see MCD stock takeoff as its growth and earnings accelerate.
Ulta Beauty (ULTA)
Another blue-chip stock on the comeback trail is Ulta Beauty (NASDAQ:ULTA). The cosmetics retailer has seen its share price rise 30% since Nov. 1. However, even with that impressive surge, ULTA stock is up only 3% on the year. Earlier in 2023, Ulta Beauty’s stock had plunged 33% over fears of slowing sales, particularly in China where the economy is struggling.
However, Ulta Beauty’s third-quarter print calmed many of those worries and lit a fire under the company’s shares. ULTA stock jumped 11% after the cosmetics company reported strong Q3 financial results and raised its forward guidance. The retailer announced earnings of $5.07 a share and revenue of $2.49 billion. Analysts forecast earnings of $4.96 and $2.47 billion in revenue. Ulta Beauty also lifted its guidance, saying it now anticipates full-year sales of $11.15 billion and earnings of $25.60 per share.
Mastercard (MA)
With worldwide travel recovering to pre-pandemic levels, Mastercard (NYSE:MA) is performing well. In 2023, the stock price increased 22%. The company is sharing its good fortune with shareholders, recently lifting its quarterly dividend payment by 16% and announcing a new $11 billion stock buyback program. The rewards have been well-received by stockholders judging by the fact that MA stock has gained 5% in the past month.
Going forward, Mastercard will pay a quarterly dividend of 66 cents, giving MA stock a yield of 0.64%. As for the new $11 billion share repurchase program, it will begin once the current $9 billion plan, which has $3.5 billion remaining, is finished. Mastercard can afford the generous rewards thanks to its strong financial results, which have steadily improved since the Covid-19 pandemic ended and look likely to remain strong in 2024.
On the date of publication, Joel Baglole held long positions in MSFT and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
