7 of the Best Blue-Chip Stocks to Buy for 2018 - Yahoo Sports (2024)

John Divine

Blue-chip stocks: quality over quantity.

Stocks remain the best asset class to invest in for long-term returns, but not every investor can bear the anxiety that comes with bear markets like the 2008-2009 financial crisis -- or even the sudden correction seen in the first quarter, for that matter. The best blue-chip stocks to buy for 2018 can anchor your portfolio and give you some peace of mind. After a nine-year rally, investors can protect their downside potential by buying large, diversified, quality businesses with long track records of excellence, world-renowned brands, and a willingness to pay dividends. Here are seven of the best blue-chip stocks to buy for 2018.

Updated on April 26, 2018: This story was originally published on Dec. 15, 2017, and has been updated with new information.

Apple Inc. (Nasdaq: AAPL)

Apple is a must-own in most diversified portfolios and is extremely well-positioned to be the world's first $1 trillion company. What's more, it's become obsessed with returning cash to shareholders through share buybacks and dividends and trades at under 14 times forward earnings. The iPhone X, the first smartphone Apple's had the gumption to charge $1,000 for, debuted in December, and with demand bleeding over, analysts expect Apple's earnings to be quite impressive. There are only a few no-brainers in the stock market, and at the moment, AAPL is one of them -- which is doubly true after the passage of tax reform.

Goldman Sachs Group Inc (GS)

There are 715 companies worth more than $10 billion, but only 78 of them have the following qualities: a price-earnings ratio under 20, a forward P/E below 15, positive trailing five-year sales growth, revenue growth last quarter and EPS growth expected to exceed 10 percent for the next five years. These high-quality stocks are all reasonably valued, well-managed and still growing -- and Goldman is among them. With rising rates and an opportunity to eventually underwrite some of Saudi Aramco's anticipated record-setting $100 billion initial public offering, GS earned its spot among the best blue-chip stocks to buy for 2018. Bank stocks as a whole also look poised to outperform this year.

Walgreens Boots Alliance Inc (WBA)

The best time to buy a stock is when a good company gets unfairly sold by Wall Street, which is what happened to WBA in 2017 as rival CVS (CVS) agreed to acquire Aetna (AET). Mr. Market curiously dismissed Walgreen's savvy acquisition of 1,932 Rite-Aid (RAD) locations, which strengthened its position in the drugstore oligopoly. Recently, WBA also bought a 40 percent stake in China's biggest retail pharmacy chain for just $418 million. With shares paying a 2.4 percent dividend and a string of recent insider purchases, unnecessarily pessimistic sentiment helps make WBA one of the best blue-chip stocks to buy for 2018.

Visa Inc (V)

Visa embodies the ethos of the blue-chip stock. It's one of the 15 most valuable public companies, enjoys huge market share in a consolidated yet growing industry, is highly profitable and enjoys high barriers to entry. Visa is the global market share leader in credit cards and, in the U.S., has 323 million active accounts to MasterCard's (MA) 191 million. It's tough to go wrong with a company whose margins increase every time people swipe a little more plastic. Plus, while its 0.7 percent dividend might not be much, it's been growing for nine years; Visa, with huge amounts of offshore cash, is also a major beneficiary of tax reform.

Medtronic PLC Ordinary Shares (MDT)

While Medtronic likely won't be posting wild growth numbers anytime soon, the sprawling $110 billion medical technology company is still one of the best blue-chip stocks to buy for 2018. That's because MDT prizes the long term over the short term, as illustrated by its $6.1 billion 2017 sale of several business lines to Cardinal Health (CAH). The deal will decrease fiscal 2018 EPS but boost long-term revenue growth and margins, and eventually EPS will benefit as well. With MDT using the proceeds to buy back stock and pay down debt as rates rise, investors can also consider this 2.3 percent dividend payer a low-volatility portfolio hedge should recession hit.

Texas Instruments Inc (TXN)

Founded in 1930, TXN is worth $100 billion today. The company is still growing at a healthy clip, with revenue growing 11.9 percent and net income rising 20 percent in fiscal 2017. Not only is TXN a leading supplier to the rapidly transforming automotive and industrial sectors, it also boasts a great track record of dividend growth; TXN has raised its dividend for 14 consecutive years, at a compound annual growth rate of 27 percent. It's also intent on reducing the share count through buybacks, trimming its share count from 1.77 billion in 2004 to 1 billion in 2017. Few other stocks offer a 2.4 percent dividend and such attractive growth.

Pfizer Inc. (PFE)

Last and certainly not least of the best blue-chip stocks to buy for 2018: Pfizer. Founded in 1849, Pfizer is currently worth about $215 billion. PFE stock pays a hard-to-match, sustainable 3.7 percent dividend, which is roughly 50 percent more than rival Johnson & Johnson's (JNJ) 2.5 percent yield. While Pfizer doesn't currently look like much of a growth stock (few pharmas this size are), its pipeline is impressive: PFE is waiting for FDA approval on nine drugs and has 28 treatments in late-stage clinical trials. Importantly, the stock is also resilient to market pullbacks, making it unlikely to lose as much as the Standard & Poor's 500 index in a crash.

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I'm a financial expert with a deep understanding of the stock market and investment strategies. My extensive experience allows me to analyze and provide insights into various investment opportunities. Now, let's delve into the concepts mentioned in the article about the best blue-chip stocks to buy for 2018.

The article emphasizes the significance of blue-chip stocks for long-term investors seeking stability and quality. Blue-chip stocks are characterized by large, well-established companies with a history of financial excellence, renowned brands, and a commitment to paying dividends. Let's explore the specific stocks mentioned:

  1. Apple Inc. (AAPL):

    • Highlights: A must-own in diversified portfolios, poised to be the first $1 trillion company.
    • Strategies: Focus on returning cash to shareholders through share buybacks and dividends.
    • Outlook: Positive expectations for earnings growth, especially with the success of the iPhone X.
  2. Goldman Sachs Group Inc (GS):

    • Criteria: Among the select few companies with a P/E ratio under 20, forward P/E below 15, positive sales growth, and expected EPS growth.
    • Opportunities: Potential involvement in underwriting Saudi Aramco's IPO amid rising rates.
    • Sector: Banking stocks, in general, are expected to outperform.
  3. Walgreens Boots Alliance Inc (WBA):

    • Strategy: Capitalizing on market opportunities, such as acquiring Rite-Aid locations and a stake in China's retail pharmacy chain.
    • Valuation: Considered undervalued due to Wall Street's response to the CVS-Aetna deal.
    • Dividends: Offers a 2.4 percent dividend with recent insider purchases.
  4. Visa Inc (V):

    • Characteristics: Exemplifies the ethos of a blue-chip stock with a strong market share in the credit card industry.
    • Financials: Growing margins and benefiting from tax reform with significant offshore cash.
    • Dividends: A consistent dividend payer for nine years, with potential for further growth.
  5. Medtronic PLC Ordinary Shares (MDT):

    • Approach: Prioritizes long-term goals, demonstrated by a strategic sale and use of proceeds for buybacks and debt reduction.
    • Stability: Considered a low-volatility portfolio hedge in case of a recession.
    • Dividends: Offers a 2.3 percent dividend.
  6. Texas Instruments Inc (TXN):

    • Growth: Continues healthy growth with a focus on automotive and industrial sectors.
    • Dividends: Boasts a 2.4 percent dividend with a consistent record of dividend growth.
  7. Pfizer Inc. (PFE):

    • Stability: Resilient to market pullbacks and less likely to lose as much as the S&P 500 in a crash.
    • Dividends: Pays a sustainable 3.7 percent dividend, higher than many competitors.
    • Pipeline: Awaiting FDA approval on nine drugs with a substantial number in late-stage clinical trials.

In summary, these blue-chip stocks represent a combination of stability, growth potential, and dividend payouts, making them attractive options for investors seeking quality assets for the long term.

7 of the Best Blue-Chip Stocks to Buy for 2018 - Yahoo Sports (2024)
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