Every stock market dip presents opportunities for blue-chip stocks to buy. Your favorite stocks get cheaper with every dip and allow you to build your positions while lowering your cost basis.
Knowing which stocks to buy on a dip can leave you more prepared when the time arrives. Investors should make these plans now instead of trying to think on the fly. These are some of the promising blue-chip stocks to buy on a dip.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a leader in key industries like cloud computing and artificial intelligence. The company has enough capital and resources to tap into opportunities quickly and reward long-term investors.
Microsoft Cloud remains a highlight for the company that now makes up more than half of its total revenue. This segment reached $33.7 billion in revenue in the second quarter of fiscal 2024. Microsoft Cloud grew by 24% year-over-year while the business as a whole increased by 18% year-over-year. Total revenue came in at $62.0 billion.
The tech giant’s artificial intelligence initiatives can create more opportunities. Copilot recently expanded to include cybersecurity services. This new feature will allow individuals and businesses to stay safe from cyber attacks. It’s also possible to detect threats before they become significant attacks.
Microsoft is a buy-and-hold stock that has delivered a 5-year gain of 264% for its investors. The stock is off to a good start and is up by 16% year-to-date.
Alphabet (GOOG,GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) combines a reasonable valuation with a reliable business model. The Gemini blunder appears to be in the rearview mirror as investors look at the company’s advertising channels and positive developments around its AI initiatives. As negative sentiment fades, more investors remember that the corporation has a few key components that can generate more growth.
Alphabet delivered 13% year-over-year revenue growth in the fourth quarter of 2023. Advertising is still the majority of the company’s revenue, but Google Cloud revenue has made a lot of progress. Google Cloud generates more than 10% of Alphabet’s total revenue and is growing at a faster pace than the advertising segment.
The stock has been off to a slow start compared to most of the other Magnificent Seven stocks. Shares are only up by 9% year-to-date but have gained 15% since March 6th. Shares are up by 43% over the past year and have gained 159% over the past five years.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is another trillion-dollar tech giant that operates in multiple verticals. Amazon’s two main revenue drivers are its online marketplace and Amazon Web Services. Amazon was an early pioneer in cloud computing and had a lead over Microsoft and Alphabet in that industry. Microsoft is in second place while Alphabet is in a distant third. It’s really a battle between those companies.
Amazon also has the opportunity to drive more revenue through streaming and advertising. The tech giant has enough capital to invest into these initiatives. Amazon CEO Andy Jassy mentioned advertising in the Q4 2023 press release and there are several notes in the release that detail Prime Video’s successes. Investors should monitor how these two business segments develop over time.
Analysts feel confident about Amazon’s long-term vision. The stock is rated as a “Strong Buy” among 41 analysts and has a projected 17% upside. Amazon stock is up by 81% over the past year.
Chipotle (CMG)
Chipotle (NYSE:CMG) has established itself as a top fast-food restaurant chain for consumers seeking healthier meals. The Mexican Grill firm has established more than 3,300 locations and has plans to open more restaurants this year than it did in 2023. Chipotle plans to open 285-315 restaurants in 2024 compared to 271 in 2023.
Chipotle delivered impressive top-line and bottom-line growth rates in the fourth quarter of 2023. Revenue increased by 15.4% year-over-year while diluted earnings per share were up by 27.3% year-over-year. Most of its new restaurants are coming with Chipotlanes. This feature helps the company serve more customers by simplifying online orders. Chipotle opened 121 new restaurants in Q4 2023, and 110 of those restaurants included Chipotlanes.
Chipotle has a long-term goal of exceeding 7,000 restaurants. The company would have to more than double its total number of restaurants to achieve this goal. The stock will become a lot more valuable if Chipotle realizes this ambition.
Visa (V)
Visa (NYSE:V) is the leading credit and debit card issuer that makes money from each transaction involving its cards. The stock has a 36 P/E ratio and impressive profit margins. Visa regularly exceeds 50% net profit margins and offers a haven if the economy slows down.
The fintech company started the fiscal by posting 9% year-over-year revenue growth and 17% year-over-year GAAP net income growth in Q1 FY24.
Despite having a 0.73% dividend yield, Visa allocates a significant amount of capital toward its dividend program and stock buybacks. The company put $4.4 billion into these initiatives in the first quarter of fiscal 2024. The fintech firm recently hiked its quarterly dividend from $0.45 per share to $0.52 per share which is a 15.6% year-over-year increase.
Visa stock is rated as a “Strong Buy” among 23 analysts and has an average price target that implies an 8.5% upside. The stock is up by 81% over the past five years. Investors should note that Visa only dropped by 4% in 2022 which was a bad year for many growth stocks.
Elf Beauty (ELF)
Elf Beauty (NYSE:ELF) is a high-growth beauty brand that recently achieved its 20th consecutive quarter of net sales growth. The stock has trounced the market and is up by more than 1,800% over the past five years.
The firm’s cosmetics products use cruelty-free ingredients and are a big hit among Gen Z and other consumers. Elf Beauty used its top-tier product line to gain an additional 305 basis points in market share within the industry. Elf Beauty sales were up by 85% year-over-year in the third quarter of fiscal 2024. E-commerce and retail channels both contributed to the high sales growth and prompted the leadership to raise its fiscal 2024 outlook.
The updated fiscal 2024 outlook indicates a meaningful increase. The firm previously anticipated fiscal 2024 sales to range from $896 million to $906 million. The new guidance calls for net sales to range from $980 million to $990 million. Net sales guidance increased by 9.3% year-over-year at the midpoints ($901 million and $985 million respectively). Elf Beauty has the makings of a long-term winner.
Walmart (WMT)
Walmart (NYSE:WMT) has mostly kept up with the S&P 500. America’s largest retailer is up by 30% over the past year and has gained 87% over the past five years. Investors get to enjoy a 1.36% dividend yield and a return to dividend growth.
The company increased its dividend by 9% which is its largest increase in more than 10 years. This dividend also marks Walmart’s 51st consecutive year of raising its dividend. Walmart has the financial strength to support many dividend hikes and continues to grow. The company recently posted a 5.7% year-over-year revenue increase in the fourth quarter of 2023.
Walmart can accelerate its revenue and earnings growth in future quarters thanks to e-commerce and advertising. Global e-commerce sales grew by 23% year-over-year and are starting to make up a respectable percentage of total revenue.
It will still take a while for the global advertising business to impact sales since that segment ‘only’ generated $3.4 billion in 2023. However, that segment grew by 28% year-over-year and the recent Vizio acquisition can accelerate advertising revenue once it is finalized.
On this date of publication, Marc Guberti held long positions in MSFT, GOOG, and ELF. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
