Investing in blue-chip stocks this summer is a smart choice for any investor who wants to grow their portfolio. By buying stocks that represent established, financially sound companies, blue-chip stocks offer stability that investors can count on to anchor their holdings.
So far in 2024, the S&P 500 is up 12% and the Nasdaq Composite jumped 14%. However, the Dow Jones Industrial Average, which includes many blue-chip stocks, has only increased by 3%. So, choosing which blue-chip stocks to buy is of paramount importance. In today’s market, I would favor blue-chip stocks that have a technology background.
Given the current market conditions, with the S&P 500 and Nasdaq Composite posting significant gains, there are advantages to including the best blue-chip stocks into your portfolio. We’ll use the Portfolio Grader to identify the best blue-chip stocks to buy, based on earnings performance, growth, momentum and analyst sentiment.
By choosing blue-chip stocks with a proven track record, stability, and potential for long-term growth, you will set yourself up to have a profitable summer investing season.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is one of the best blue-chip stocks you can buy. They don’t get any bigger than Microsoft — the company has a market capitalization of more than $3.1 trillion, making it the most valuable company in the world.
And you can make the argument that they don’t come any better than Microsoft, either. The company’s Microsoft Office 365 suite of products is used by businesses and individuals around the world and includes some of the most popular software on the planet, including Word, Excel, PowerPoint and Outlook.
The company’s Microsoft Teams platform allows co-workers to share files on Microsoft’s cloud, collaborate and have both one-on-one and group meetings — an essential component for doing business in a hybrid work environment.
Microsoft also has an important partnership with OpenAI, the developer of the generative artificial intelligence product ChatGPT, and was an early adopter in incorporating generative AI into its products.
Earnings for the fiscal third quarter of 2024 included $61.9 billion in revenue, up 17% from a year ago. Net income of $21.9 billion and earnings per share of $2.94 was a 20% increase from last year.
Microsoft is continuing to show a growth mindset that bodes well for today’s investor. The stock is up 14% this year and gets a “B” rating in the Portfolio Grader.
Alphabet (GOOG)
Alphabet (NASDAQ;GOOG;NASDAQ:GOOGL) is an outstanding name in itself. It has tremendous advertising power through its Google search engine, which maintains about 90% of global search traffic.
That makes the Google platform one of the most important places for advertisers to target with their messaging.
And that’s a huge money-maker for Alphabet. Revenue in the first quarter of the year just from Google search was $46.1 billion, up from $40.3 billion a year ago. Alphabet also got another $8 billion in revenue from YouTube ads and $7.4 billion from its Google Network.
All in all, Google services and advertising accounted for $70.3 billion of the company’s $80.5 billion in revenue for the quarter.
And true to the nature of a blue-chip stock, Alphabet also is starting to pay a quarterly dividend, with 20 cents per share payable to shareholders of record on June 10. It’s the company’s first dividend, but management indicates that it intends to at least maintain the quarterly payout in the future.
GOOG stock is up 32% since March and gets a “B” rating in the Portfolio Grader.
Meta Platforms (META)
There must be something in the water these days, because Alphabet isn’t the only blue-chip tech company that is starting to pay a dividend. Meta Platforms (NASDAQ:META) announced in February that it would begin paying a dividend, and the first payment of 50 cents per share went out on Feb. 21.
It’s notable that tech companies are making dividend payments because they have been solely focused on growth — increasing market share, position and pumping revenues into new products to grow the business.
But a quarterly dividend payout indicates that the company sees value in its shareholders as well, and is one of the hallmarks of a true blue-chip company.
Meta Platforms has plenty of money to keep the dividend going, as well. The owner of the Facebook, Instagram, Threads and WhatsApp platforms saw revenue in the first quarter of $36.4 billion, up 27% from a year ago.
Net income was $12.3 billion, an increase of 117% from last year, and EPS was $4.71, up from $2.20 in the first quarter of 2023.
META stock is up 39% this year and gets a “B” rating in the Portfolio Grader.
International Business Machines (IBM)
You have to consider International Business Machines (NYSE:IBM) a blue-chip stock when you consider its history.
It’s one of the most well-known names in computing, tracing its history back for generations and punch-card based data processing machines in the 1880s.
IBM was responsible for the first electronic computer, launched in 1943, and the first personal computer in 1981.
But it doesn’t get to be a top-rated blue-chip stock just for its history. Today’s IBM remains relevant by being one of the biggest cloud infrastructure providers on the planet. It offers its Watson AI engine and the Watsonx generative AI platform to enterprise customers.
First-quarter earnings saw $14.5 billion in revenue, which was up 1% from a year ago. Net income was $1.6 billion, however, up 69% increase from last year. EPS of $1.69 was up 66% from the first quarter of 2023.
IBM expects full-year revenue growth in 2024 in the mid- single digits, and expects to generate roughly $12 billion in free cash flow for the year.
The stock is up 3% so far this year and gets a “B” rating in the Portfolio Grader.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) doesn’t have the long history of IBM boasts. But for a streaming service, Netflix is one of the oldest and best — and it’s still performing well.
Netflix dates its history to the days of video rental stores. It emerged as a disruptive force by allowing customers to rent movies by mail — and they could keep them as long as they wanted.
When they wanted to watch something different, all they had to do was send the movie back in the pre-paid envelope and choose something else.
The convenient business model utterly destroyed the video rental store business, but Netflix continued to evolve into a streaming service that offered movies and reruns of TV programming, as well as original content.
Even after other streaming services emerged as competition, Netflix remains the gold standard. Netflix reported 269.6 million paid memberships in the first quarter, up 16% from a year ago.
Revenue in the first quarter was $9.3 billion, up from $8.1 billion a year ago. Net income was $2.3 billion and $5.2 per share versus $1.3 billion and $2.88 per share in the same quarter a year ago.
NFLX stock is up 33% this year and gets an “A” rating in the Portfolio Grader.
Walmart (WMT)
Walmart (NYSE:WMT) isn’t a technology company, although it uses tech to its advantage to operate its warehouses, manage supplies and interact with customers. It also has a growing e-commerce presence that is heavily reliant on technology.
But what makes Walmart a blue-chip stock is its position as a brick-and-mortar retailer. It’s the biggest retailer in the world, with more than 10,800 locations that includes every U.S. state and two dozen countries.
Walmart’s low-cost strategy is ideal as customers are looking to stretch their dollars in an inflationary environment. Walmart artificially keeps the prices of its own brands low to force name-brand suppliers to lower their prices as well. And because Walmart has so many stores, it has unmatched negotiating power in pressuring name brands.
Revenue in the first fiscal quarter of 2025 was $161.5 billion, up 6% from the previous year. That include e-commerce says that were up an impressive 21%.
Walmart also issued revised full-year guidance that indicates the company should come in at the high end or slightly exceed its prediction that net sales would increase 3% to 4% for the year. The company also says it may exceed its EPS prediction of a range between $2.23 to $2.37 for the year.
WMT stock is up 27% this year and gets an “A” rating in the Portfolio Grader.
Eli Lilly & Co. (LLY)
Eli Lilly & Co. (NYSE:LLY) is a top biotech company that offers a range of drugs and treatments. But it’s getting the most attention for its entry into the popular field of weight loss drugs.
About 42% of the U.S. population is obese, and there are hundreds of diet programs, weight-loss schemes and products on the market for people who want to drop some pounds. But it wasn’t until November 2023 that the Food and Drug Administration finally approved Lilly’s drug, Zepbound, as a treatment specifically to help people lose weight.
About 1 in 3 people who took the injectable drug at its highest dose (15 mg) report losing more than 58 pounds over a 72-week period.
The drug in Zepbound, tirzepatide, is also used in another highly successful Lilly product called Mounjaro, which is used to treat type 2 diabetes.
The drugs are so popular that Lilly is increasing its investment in its Indiana manufacturing facility from $3.7 billion to $9 billion to increase the production of tirzepatide and other pipeline products.
Revenue in the first quarter was $8.76 billion, up 26% from a year ago thanks to Mounjaro, Zepbound, Verzenio and Jardiance. Income of $2.2 billion was up 67% from last year, and EPS of $2.48 was an improvement from $1.49 in the first quarter of 2023.
LLY stock is up 43% in 2024 and gets an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had long positions in MSFT and LLY. 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 did not hold (either directly or indirectly) any positions in the securities mentioned in this article.