During times of market volatility, blue-chip stocks give investors the benefits of growth and the security of income. Although the definition of a blue-chip stock may vary depending on the qualities individual investors look for, there is a consensus that all blue-chip stocks share three characteristics. First, they are well-known companies to the general public as well as to investors. They typically are associated with popular “brand name” products. Second, they have solid balance sheets that give them the ability to perform well in good and not-so-good economic conditions. The financial stability of these stocks is also typically reflected in regular dividend payments to shareholders. The third characteristic is that they are established companies that are rewarded for this by being listed on the major market indexes.
That combination can give your portfolio the opportunity with reward while minimizing your risk in a year like 2019 where the economy, at the very least, is facing a very mature economic growth cycle. With a budget battle still far from settled, ongoing trade tensions with China, and the unnerving potential for further interest rate hikes.
An additional benefit to blue-chip stocks is that they can be found in virtually any sector. So investors don’t have to sacrifice the potential growth of technology stocks when investing in blue-chip stocks. In this report, we’ve put together a list of 7 blue-chip stocks that are strong on their own merits but should also help to give the broader market a boost.
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- Deere & Co.
- Union Pacific Railroad
- J.B. Hunt
- Alphabet
- Adobe
- Boeing
- Align Technology
#1 - Deere & Co. (NYSE:DE)
Deere & Co. (NYSE: DE) - A year ago, analysts were sour on Deere's prospects. After all, the farm machinery manufacturer was expected to be one of the higher profile victims of the tariff dispute between the United States and China. Deere was expected to suffer on both sides of the trade war. Not only would their raw materials cost increase, but they looked to lose sales to China. But, at least for now, those concerns seem to be overstated. In their most recent earnings report, they posted earnings per share (EPS) of $2.59 that missed expectations but was higher than the number in the prior twelve-month period ($1.97). And the company also posted a 36% increase in net equipment sales. Going forward the company is projecting modest sales growth (7% in 2019; 4% in 2020) that should set them up for a 22% increase in profits in 2019 and a 12% profit bump in 2020. Among other blue-chip stocks, Deere has a small dividend yield of 1.8%.
About Deere & Company
Deere & Company engages in the manufacture and distribution of various equipment worldwide. The company operates through four segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. The Production and Precision Agriculture segment provides large and medium tractors, combines, cotton pickers and strippers, sugarcane harvesters and loaders, harvesting front-end equipment, pull-behind scrapers, and tillage and seeding equipment, as well as application equipment, including sprayers and nutrient management, and soil preparation machinery for grain growers.
Read More - Current Price
- $432.49
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 13 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $443.94 (2.6% Upside)
#2 - Union Pacific Railroad (NYSE:UNP)
Union Pacific Railroad (NYSE: UNP) - Rail companies are considered a bellwether of the broader economy. Although a company like Union Pacific doesn’t reach across every sector, they do tend to point to strengths in the manufacturing and energy sectors. Over the last 20 years, American railroad companies have undergone a "Rail Renaissance" that changed their outlook among investors. Once an industry seen as heavily prone to recessions, they have now become an industry that uses automation that allows the railways to operate safely with lower onboard personnel costs. As a result, UNP – and all Class 1 railroads in the United States – were able to make, and retain, a profit even during the depths of the financial crisis and recession of 2008 and 2009. Union Pacific, the largest publicly quoted railroad, operates throughout the western United States and is able to generate a return on invested capital (ROIC) of about 14% that figures to stay intact because of the territorial nature of railroads. In their Q4 2018 earnings report, they beat the consensus estimate of analysts of a $2.06 EPS by earning $2.12 per share. UNP currently offers a 2.1 dividend yield and has demonstrated a 5-year dividend growth rate of 14%.
About Union Pacific
Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. The company offers transportation services for grain and grain products, fertilizers, food and refrigerated products, and coal and renewables to grain processors, animal feeders, ethanol producers, renewable biofuel producers, and other agricultural users; and construction products, industrial chemicals, plastics, forest products, specialized products, metals and ores, petroleum, liquid petroleum gases, soda ash, and sand, as well as finished automobiles, automotive parts, and merchandise in intermodal containers.
Read More - Current Price
- $226.32
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $259.80 (14.8% Upside)
#3 - J.B. Hunt (NASDAQ:JBHT)
J.B. Hunt (NASDAQ: JBHT) - If you’re looking for a transportation stock that’s not a railroad, it may be time to hit the road. The trucking industry as a whole has been stressed at keeping up with the demands of a growing economy. The American Trucking Association’s Tonnage Index is near record levels, but there is a lack of qualified truck drivers. And while shipping costs seem to be stabilizing, shippers will still be likely absorbing higher shipping costs for the majority of 2019. But while the industry as a whole is going through its share of turbulence, investors can still profit by investing in best-of-class companies. JBHT fits that mold. Shares of JBHT rose 15% in January and reported Q4 2018 earnings of $0.81 per share, which was a 20% decrease from the same period in 2017 but beat the consensus expectation of analysts. The company showed growth on the top line as well by reporting $2.32 billion in revenue that was a 16% year-over-year increase. And for the 14thconsecutive year, the company raised its quarterly dividend.
About J.B. Hunt Transport Services
J.B. Hunt Transport Services, Inc provides surface transportation, delivery, and logistic services in the United States. It operates through five segments: Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS), Final Mile Services (FMS), and Truckload (JBT). The JBI segment offers intermodal freight solutions.
Read More - Current Price
- $170.23
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $190.11 (11.7% Upside)
#4 - Alphabet (NASDAQ:GOOGL)
Alphabet (NASDAQ: GOOGL) - If you have an appetite for technology stocks, Alphabet (the company formerly known as Google) bears close attention. One of the common features of successful technology companies is their ability to adapt to change. In addition to owning YouTube and retaining their lead as an internet search and advertising space, they are making significant investments into artificial intelligence (AI) and virtual reality. And they’re not stopping there. Their Android phones are gaining in popularity and their Google Home product is making inroads into the internet of things category that is still largely Amazon’s turf. Strategic expansions will include Google Fiber, Google Play, Google Cloud which will help Alphabet move into the growing cloud space. As an investor, one of the many reasons to be excited is their financial stability. Their Google division remains their cash cow, generating revenue at over 20% year over year, allowing it to make investments in all these different areas without having to take on debt. In their Q4 2018 earnings report, Alphabet reported a revenue increase of 22% and earnings of $12.77. Both numbers beat expectations.
About Alphabet
Alphabet Inc offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube.
Read More - Current Price
- $191.41
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 35 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $206.69 (8.0% Upside)
#5 - Adobe (NASDAQ:ADBE)
Adobe (NASDAQ: ADBE) - Yet another technology stock that merits a closer look despite the recent selloff is Adobe. The undisputed leader in cloud space technology is primed to benefit from an industry that is forecasting demand for cloud services to grow over the next 2-3 years. In their most recent earnings guidance, the company forecast 20% growth for its 2019 overall sales and digital media revenue. Unlike the FAANG stocks, Adobe made it through the tech sell-off in July relatively unscathed and the stock has continued to rise. In fact, some analysts have taken note of how Adobe has continued to rise in a sector where many companies have not. This is why many analysts are bullish on the stock’s prospects going forward and why, even with their stock trading at a record level right now, the best may be yet to come, which would make their current price seem like a bargain. Not only does the company pass the smell test from a fundamental analysis viewpoint, but the technical indicators look great as well. Their stock chart for 2018 shows rhythmic, symmetrical support and a stock price that has risen to new heights off support levels.
About Adobe
Adobe Inc, together with its subsidiaries, operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content; and Document Cloud, a unified cloud-based document services platform.
Read More - Current Price
- $447.17
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 18 Buy Ratings, 8 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $584.88 (30.8% Upside)
#6 - Boeing (NYSE:BA)
Boeing (NYSE: BA) - Boeing may be considered more of a long-term play, but it is well positioned for growth. The airline industry is evolving into a model that will make air travel more affordable and accessible. Boeing is forecasting demand for air travel will grow at an average annualized rate of 4.7% through 2037. And the International Air Transport Association issued a forecast that shows China will add one billion new passengers over the next 20 years. This will mean that there will need to be more jets to accommodate the traffic. In fact, for Boeing, those numbers would suggest that they will be nearly doubling their fleet. As evidence of this, the company announced that they plan to boost 737 jetliner production to a rate of 57 a month by June (an approximate 10% increase from current levels). And while the analysts' expectations of 7% revenue growth in 2019 are not going to get a lot of investors excited, what may turn heads is a 20% growth in per-share earnings. Boeing recently reported strong Q4 2018 earnings and their stock is up over 21% for the year, reaching a new high of $394.40 on February 4, 2019.
About Boeing
The Boeing Company, together with its subsidiaries, designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide. The company operates through Commercial Airplanes; Defense, Space & Security; and Global Services segments.
Read More - Current Price
- $177.35
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $190.11 (7.2% Upside)
#7 - Align Technology (NASDAQ:ALGN)
Align Technology (NASDAQ: ALGN) - Parents with kids may not know the name Align Technology, but many of them are familiar with their Invisalign dental braces. The clear braces market is exploding in the United States. This has caused investors to frown on ALGN’s stock. More competitors have entered the field, the most notable of which is the Smile Direct Club (SDC) which delivers “direct to home” products. ALGN is also facing a very real challenge of expiring patents. While these issues pose some challenges for ALGN, the company is still well positioned for growth. One of the reasons is that the Invisalign brand is still the leader in the business, a number that only reflects the number of customers who are receiving orthodontic care. The company is hoping to capitalize on the larger market of customers who may need some form of orthodontic care but do not currently receive it. As proof of that, the company is projecting 13% annual growth in the invisible orthodontics market through 2022, and sales growth of 23% in 2019. And to hedge their bets, the company owns a 19% stake in SDC.
About Align Technology
Align Technology, Inc designs, manufactures, and markets Invisalign clear aligners, and iTero intraoral scanners and services for orthodontists and general practitioner dentists in the United States, Switzerland, and internationally. The company's Clear Aligner segment offers comprehensive products, including Invisalign comprehensive package that addresses the orthodontic needs of younger patients, such as mandibular advancement, compliance indicators, and compensation for tooth eruption; and Invisalign First Phase I and Invisalign First Comprehensive Phase 2 package for younger patients generally between the ages of six and ten years, which is a mixture of primary/baby and permanent teeth.
Read More - Current Price
- $211.06
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $271.20 (28.5% Upside)
The story of 2019 is just beginning to be written, but the message is far from clear. Unemployment is low, but there remains concern about the direction of interest rates. Gridlock in the U.S. Government is welcome for advocates of a smaller government, but the looming specter of another potential government shutdown is hurting consumer confidence. This uncertainty is being reflected in the market. But rather than staying away from the market, now can be the perfect time to look at some well-established names.
Investing in blue-chip stocks is considered to be among the safest options for investors. Blue-chip companies are known for having large market caps strong financial positions, and reputable brand names that have a large following in the general public. An additional benefit for investors is that many blue-chip companies have a proven track record of delivering dividends to their shareholders. Does this mean that blue-chip stocks will never decline? Of course not. But because of their size and strength, blue-chip companies are usually well positioned to weather the storm that comes from a volatile investment environment. Historically, blue-chip stocks take smaller losses and thus typically recover more rapidly.
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