There’s nothing wrong with taking a flyer on an up-and-coming stock. Sometimes penny stocks can work, but a good portfolio likely has its fair share of great blue-chip stocks as well to provide a stable foundation.
Blue-chip stocks are those that belong to companies that are among the clear leaders in their industries and sectors, with a solid position, if not a dominant competitive advantage.
They almost always are large-cap stocks because they’ve matured enough to have a market capitalization of at least $10 billion.
Blue-chip stocks are also doing well financially, either through stock performance, revenue or profitability. And they have sterling reputations, built on the quality of their products and investor confidence in company mission and management.
I used the Portfolio Grader to identify some great blue-chip stocks as we barrel into the fourth quarter of 2023.
United Airlines (UAL)
United Airlines (NASDAQ:UAL) is one of the biggest commercial airlines in the world. It has a market cap of more than $14 billion.
It’s also among the leaders in market share in the U.S.
Revenue for the second quarter was $14.18, an increase of 17% from a year ago. Income for the quarter was $1.08 billion, or $5.03 per share. United Airlines also reported averaging more than 2,400 flights per day in the quarter, which is a new high for the company.
UAL also increased its full-year guidance, now projecting earnings per share in a range from $11 to $12.
The stock fell this summer as fuel prices rose and analysts began worrying that would cut into Q3 profitability. But if you’re a long-term investor, you have to like the potential of UAL and what appears to be an attractive price. The forward price-to-earnings ratio is less than 4.
UAL stock shows a gain of 16% in 2023 and has a “B” rating in the Portfolio Grader, making it one of the best blue-chip stocks to buy now.
Alphabet (GOOG,GOOGL)
Any list of the top blue-chip stocks has to include Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL). The owner of the Google search engine, YouTube, Waze driving app, Fitbit fitness trackers and Waymo self-driving cars has a market cap of $1.6 trillion.
It’s best known for Google, of course. Google enjoys a global market share of nearly 92%. Its dominance is so complete, in fact, that competitors complain it uses unfair tactics such as exclusionary contracts to maintain a monopoly. That issue is currently being debated in court in Washington, D.C.
Yes, investors should keep an eye on the trial, and I wouldn’t be surprised to see GOOGL stock sink a bit during the trial. But I’m also confident that Alphabet’s Google will maintain its dominance and superior market share for a long time.
Alphabet is also working generative AI into its products, the most recent being Bard Extensions.
This is something like a chatbot for your Google account that will use generative AI to answer questions using information from Gmail, Google Docs, Google Maps and other extensions.
Revenue for the second quarter was $74.6 billion, up 7% from a year ago. More than $42 billion of that came from Google search revenue.
GOOGL is up 47% in 2023 and gets a “B” rating in the Portfolio Grader.
Exxon Mobil (XOM)
For a long time, Exxon Mobil (NYSE:XOM) has been one of my favorite oil and gas stocks. The company is massive, with a market cap of nearly $460 billion, making it the biggest energy company in the U.S.
The stock itself had an up-and-down 2023, currently showing only a 4% gain for the year. And second-quarter earnings raised some concerns among investors because profits were down 56% from a year ago.
That was because of the price of oil, of course. When oil prices go up, so do Exxon’s revenues and profitability. And the price of oil topped $100 in 2022, which meant massive profits that are challenging to duplicate in 2023. Especially when the price of oil fell below $70 in the second quarter.
But look at where we are now. The price of gas is back on the rise as Saudi Arabia cuts production. JPMorgan projects that oil could return to $120 per barrel. While that would be bad for your wallet as you’re filling up the gas tank, it will also put Exxon in a position to return to near-record profitability.
XOM stock has a “B” rating in the Portfolio Grader.
McDonald’s (MCD)
If you’re looking for a market leader in the restaurant business, the conversation starts and ends with McDonald’s (NYSE:MCD).
From its modest beginning in 1940 in Berardino, California, McDonald’s revolutionized fast food and the restaurant franchise model by figuring out how to mass-produce food on the cheap.
It was the first to figure out how to replicate the process so customers would find the same experience and quality no matter in any McDonald’s location.
Today, McDonald’s has more than 38,000 locations in 100 countries. Revenue in the second quarter was up 14% to $6.47 billion, while net income of $2.31 billion was up 94% from a year ago. EPS of $3.15 was an increase of 97% from a year ago.
McDonald’s also gives you the added bonus of offering a dividend – currently, the yield is just over 2%.
MCD stock is up 3% in 2023 and gets a “B” rating in the Portfolio Grader.
Intel (INTC)
I’m impressed that Intel’s (NASDAQ:INTC) turnaround has been so effective that it’s now getting a good grade in the Portfolio Grader.
Just this summer INTC was languishing with a failing grade after two consecutive quarters of losses.
But in the second quarter, Intel showed some progress. It returned to profitability by posting net income of $1.5 billion, or 35 cents per share. That was an improvement from a quarterly loss of $454 million in the second quarter of 2022.
Intel’s turnaround was in part because it cut $1.7 billion in costs as part of its goal to trim expenses by $3 billion this year. Overall, the company is looking to be leaner by saving $10 billion annually by 2025.
That helped gross margins increase to 40% in the second quarter, beating Intel’s projections of 37.5%.
Intel has high hopes for its Gaudi 2 chip for AI applications, saying it matches up well to competitors in certain tasks. It also plans to release its next-generation Gaudi 3 chip in 2024.
The turnaround isn’t over, but it’s time to show Intel some respect. INTC stock gets a “B” rating in the Portfolio Grader.
Nvidia (NVDA)
Any progress that Intel is going to make brings Nvidia (NASDAQ:NVDA) into the conversation.
Nvidia continues to be my No. 1 pick in the semiconductor space. It’s also a massively successful blue-chip stock, with a market cap that soared over the $1 trillion mark this year.
Nvidia reigns supreme because we are living in an age where generative AI is wildly popular, and developers are working overtime to work AI technology into most tech products.
Nvidia makes the chips that are required for generative AI, with a dominant market share of 80% to 95% of the AI computing market. It had spectacular Q2 numbers, beating expectations.
Nvidia issued third-quarter guidance for $16 billion in revenue because it’s making money at a ridiculous rate. I’m betting on it to hit that number again. NVDA stock is up 190% and has an “A” rating in the Portfolio Grader.
Apple (AAPL)
Apple (NASDAQ:AAPL) is simply the biggest company in the world, with a market cap of more than $2.7 trillion. The maker of smartphones, tablets and computers saw its stock rise 33% in 2023.
On Sept. 12, the company released its newest lineup: the iPhone 15, iPhone 15 Plus, iPhone 15 Pro and iPhone 15 Pro Max. It also released its Apple Watch Series 9, Apple Watch Ultra 2, and second-generation AirPods Pro.
Pre-orders of Apple’s new iPhone 15 are strong, particularly in the massive China market. Morgan Stanley says the lead time for the iPhone 15 Pro Max is five to six weeks, which is the longest wait time for an Apple smartphone in seven years.
“While it’s far too early to call the cycle, these data points are encouraging,” Morgan Stanley analysts said.
Apple’s iPhone cycles can be a huge windfall for the company. Wedbush Securities analyst Dan Ives says he thinks the iPhone will push AAPL stock up to $240 per share over the next 12 months.
AAPL stock has a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had long positions in NVDA, GOOG and XOM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in AAPL. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
