Blue-chip stocks to buy are the names that continue to deliver for investors. While the stock prices may not always reflect this reality, the businesses continue to hum along. The fluctuations in the stock prices are just short-term noise, while the actual trend in earnings — the business — is what really matters.
We’re humming through the second-quarter earnings season now. Amid the reports, we’re separating the winners from the losers. That’s in tech as much as it’s in retail, energy and other sectors.
Again, regardless of what the stock market does — perhaps it has one more shakeout to the downside left in it — we’re getting a snapshot of the businesses that are doing well right now. These are the companies that are growing revenue and earnings, managing inflation and supply chains and navigating the mess of the global economy.
These are the blue-chip stocks that we want to be buying on the dip.
| BRK-A | Berkshire Hathaway | $455,684.50 |
| BRK-B | Berkshire Hathaway | $303.09 |
| PEP | PepsiCo | $180.39 |
| KO | Coca-Cola | $64.98 |
| CVX | Chevorn | $158.48 |
Blue-Chip Stocks to Buy: Berkshire Hathaway (BRK.A, BRK.B)
Earlier this week, I included Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) among the stocks I would buy amid a black swan market crash. The reason why is simple: it’s a top-notch blue-chip stock.
Run by Warren Buffett and Charlie Munger, the Berkshire firm has become one of America’s largest companies. Weighing in with a market capitalization of roughly $670 billion, this humble textile company has grown into a massive conglomerate.
The stock trades at a low valuation, management buys back its stock when it trades near or below book value and the group holds more than $100 billion in cash.
That pairs well with its enormous stakes in public companies and a large portfolio of private companies among various industries, like freight, energy and insurance. Not to mention Berkshire can secure deals that public investors cannot, often tied to preferred stock and big dividend yields.
Last quarter, its operating earnings rose 32% sequentially and 39% year-over-year (YOY). Clearly, the Oracle of Omaha’s investing plans continue to pay off.
Coca-Cola (KO) and PepsiCo (PEP)
Take a few minutes and look at the beverage sector right now. While the rest of the market is trying to resolve out of a bear market, Celsius (NASDAQ:CELH), Keurig Dr. Pepper (NASDAQ:KDP), PepsiCo (NYSE:PEP) and Coca-Cola (NYSE:KO) are at or near all-time highs.
Focusing on the leaders in this space — PepsiCo and Coca-Cola — these two companies continue to deliver.
In the most recent quarter, Coca-Cola beat on earnings and revenue expectations, as the latter grew 11.9% YOY to $11.3 billion and beat expectations by more than $700 million. This company is going gangbusters right now. Further, Coca-Cola also raised its full-year outlook, now expecting organic revenue growth of 12% to 13% versus 7% to 8% growth previously.
As for PepsiCo, the drink and snacks conglomerate also delivered a top- and bottom-line beat. Revenue grew slower than it did at Coca-Cola, up 5.3%, although the company also raised its full-year revenue outlook. PepsiCo is now hitting all-time highs.
It also helps that Pepsi and Coca-Cola pay a decent dividend, currently yielding 2.6% and 2.7%, respectively.
Blue-Chip Stocks to Buy: Chevron (CVX)
It’s tough to add an energy company to this list — even if it is a company as good as Chevron (NYSE:CVX) — because the sector can be so volatile. It needs a sort of “goldilocks” scenario for these stocks to continue to perform well, including elevated energy prices and a strong economy. Typically elevated energy prices have a negative impact on the economy and as a result, it can be a double-edged sword. Regardless, Chevron is worth mentioning.
As the second-largest oil company in the U.S. behind Exxon Mobil (NYSE:XOM), Chevron is mopping up right now amid the boom in energy prices. When the company reported earnings last month, the results blew past expectations.
Earnings of $5.95 per share beat expectations and revenue of $68.7 billion blasted estimates by $11 billion while growing more than 82% YOY. Cash flow soared as management raised the upper range of its buyback plan and paid down some debt. Don’t forget it also pays out a 3.6% dividend yield.
Can the good times last? Analysts expect considerable earnings growth this year and just a small dip next year. That leaves the stock trading at just 9.3 times this year’s earnings — and for what it’s worth, consider how conservative consensus estimates were for the second quarter.
On the date of publication, Bret Kenwell 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.