Smart investors understand the importance of blue-chip stocks in their portfolios, and that is why they load up on them regularly. Blue-chip companies bring stability and add strength to your portfolio. These are well-known companies with a solid history and an impressive balance sheet, promising growth and consistent success. While you may not see immediate growth or upside in blue-chip companies, you will have high safety and little risk — making them worth your money. If you are keen on investing in undervalued blue-chip stocks and do not know where to start, I’ll help you pick the finest of the lot. Let’s take a look at the three best blue-chip stocks to buy now.
Blue-Chip Stocks to Buy: Apple (AAPL)
Known as one of the most reliable companies in the industry, Apple (NASDAQ:AAPL) is here to stay for many years to come. The company is on par with some of the biggest tech giants and has a loyal customer base. The tech giant has a market cap of $2.74 trillion, and its stock has grown over 220% in the last five years. It dominates the tech space and is steadily increasing its market share. Besides a range of popular products, the company also offers unmatched services and has seen a rise in its services revenue segment.
In the recent quarterly results, the company had a dip in iPhone, iPad and Mac sales due to macroeconomic factors. With a drop in consumer spending, Apple saw a decline in product sales. However, the sales numbers were still better than those of its competitors. It reported a revenue of $81.8 billion, which was still in line with Wall Street estimates. The company’s earnings per share came in at $1.26, and it seems like a pretty decent quarter to me overall.
AAPL stock is trading at $176 right now and looks highly undervalued to me. The stock is up over 40% year to date and 19% in the past six months. When searching for blue-chip stocks to buy, a long-term outlook is necessary. While Apple may have struggled due to rising inflation, it is steadily moving ahead with new products, artificial intelligence (AI) and digital services. The stock could be worth much more in the next five years and is a solid addition to your portfolio. It also pays a quarterly dividend of $0.24 and a dividend yield of 0.54%. This is one stock to keep buying on every dip.
Nvidia (NASDAQ:NVDA) was my favorite stock even before it started making big news with AI. Today, the company is a leader in the AI race and dominates several markets. With a market cap of $1.07 trillion, Nvidia will only grow larger and wider. Having reported record sales in the first quarter this year, the company saw its stock moving upward, and it seems unstoppable. NVDA stock is on fire and is changing hands at $434 today. It is up over 200% year to date and is still lower than the 52-week high of $480.
Once a pioneer in the gaming industry, Nvidia has invested heavily in AI and is building chips used to run AI applications. The company enjoys a first-mover advantage in the industry and is already reaping the benefits. The company recently unveiled a new chip named GH200 Grace Hopper Superchip, which will speed up generative AI applications. The chip is suitable for large language models and will be available in the second quarter of 2024. Nvidia is also generating significant revenue from its data center business and has an envious clientele. Its upcoming earnings could have a huge impact on the entire market altogether.
The company has several opportunities in the cloud computing, gaming and AI segment. Nvidia reported revenue growth of 19% for the quarter, down 13% year-over-year. However, the company expects to hit $11 billion in revenue next quarter (give or take 2%). If it hits that goal, that would be a 53% jump. Yes, the stock isn’t cheap, but you will not regret adding it to your portfolio. The stock has huge upside potential, and you could take home big gains year after year — if you buy and hold.
When it comes to blue-chip stocks, one cannot miss out on the tech dinosaur, Microsoft (NASDAQ:MSFT). The company has also taken big steps to incorporate AI in its applications and made multibillion-dollar investments in OpenAI. While the company already had a stronghold in the industry, it is trying to expand its AI offerings and has announced Copilot, a subscription service that will leverage AI in its wide suite of product offerings.
With Microsoft, the expectations are always sky-high. Whether the offering is a product or earnings, investors expect only the best from this company. That is why it is a must-buy. MSFT stock is trading at $320 today, down 7% over the past month. This dip is a buying opportunity. The stock dropped after its earnings outlook did not meet investor expectations, and I believe it’s a temporary drop.
The company saw an 8% increase in revenue year-over-year, reaching $56.2 billion. It also saw an 11% rise in gross profits to $39.4 billion, and earnings per share (EPS) came in at $2.69. MSFT is one of the best blue-chip stocks to buy now. While the financials are impressive, the investors weren’t happy with the management’s projections and outlook for the coming quarter.
As the economy improves and we see an increase in spending, Microsoft stock will start marching ahead. While the stock is already trading at a premium, if you look at the bigger picture, it looks undervalued to me and could hit a new high in the coming months.
On the date of publication, Vandita Jadeja did not hold (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.