Stocks to buy

If You Can Only Buy One Blue-Chip Stock in December, It Better Be One of These 3 Names

Not every investor wants to search for the next million-maker stock. While these types of stocks can generate significant returns, they also have more risk. Blue-chip stocks allow investors to enter positions with less risk, and these stocks can still outperform the market. Blue-chip stocks are reliable companies that have good financials and a few decades of business experience. Some corporations have been in business for over 100 years. That longevity indicates these companies have survived various economic cycles and are more stable than the market during recessions.

Investors can accumulate blue-chip stocks to increase their capital while minimizing their potential downside. These are some of the top blue-chip stocks to consider if you can only choose one.

Walmart (WMT)

Source: Ken Wolter / Shutterstock.com

Walmart (NYSE:WMT) has been in business for over 60 years and is a popular retailer for consumers who want to save money. The company offers the lowest prices which are especially useful with high inflation.

Walmart isn’t one of those blue-chip stocks that’s going to outperform the market. It’s only up by 6.92% year-to-date but has gained a more impressive 64.74% over the past five years. 

Walmart reported a decent third quarter (FY 2024) which reflects the nature of a mature company. Revenue went up by 5.2% year-over-year and the e-commerce segment delivered 15% year-over-year growth.

While the revenue growth is decent, the stock dropped on that report due to the company’s cautious stance. Sales started to slow down in late October and it’s not a good sign that Walmart and others pulled back on seasonal hires.

Walmart is better positioned to withstand macroeconomic uncertainty. It has a lower valuation than many growth stocks and pays out a 1.50% dividend yield. Walmart has endured many recessions before. As macroeconomic conditions worsen, stocks like Walmart look more enticing relative to the market. The company’s year-to-date returns and revenue growth are more enticing than most retailers.

Procter & Gamble (PG)

Source: Jonathan Weiss / Shutterstock.com

Procter & Gamble (NYSE:PG) offers many essential goods that help with cleaning and self-care. Many of Procter & Gamble’s customers frequently return to buy more products since they eventually wear out. 

The company has a wide range of products including toothpaste, dishwashers, razors, paper towels and laundry detergent. Shares have been flat year-to-date but are up by almost 65% over the past five years. Investors also get to enjoy a 2.47% dividend yield as they hold onto their shares.

Procter & Gamble isn’t the type of stock that keeps up with the market when it rallies. However, the company’s 25 P/E ratio leaves it less vulnerable than many other stocks. The company also reported good earnings recently. Net sales went up by 6% year-over-year while net income increased by 15% year-over-year. 

The stock truly shines for investors who do not want much volatility. PG stock currently has a 0.46 Beta. A higher beta indicates more dramatic market swings. It’s much lower than the S&P 500’s 1.00 beta.

Alphabet (GOOG, GOOGL)

Source: Koshiro K / Shutterstock.com

Companies will run advertisements to reach more customers in any economy. While advertising takes a hit during economic slowdowns, the largest advertisers in the world don’t get hit as hard.

When most people think of advertising, they immediately think of Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Google and YouTube are two of the most visited websites and generate billions of dollars every quarter. 

Alphabet has a 1.05 beta which means its volatility is in line with the market. While that’s volatility reading is higher than Walmart and P&G, Alphabet has delivered higher returns and still has a good valuation. 

Alphabet shares have gained almost 50% year-to-date and are up by over 150% over the past five years. Shares currently trade at a 26 P/E ratio and a 20 forward P/E ratio. 

The company’s revenue and earnings growth have been accelerating compared to 2022 growth. This quarter, Alphabet increased its revenue by 11% year-over-year. Net income jumped by 41.6% year-over-year. The stock combines the blue-chip elements of Walmart and Procter & Gamble with compelling growth potential.

On the date of publication, Marc Guberti 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.comPublishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

Articles You May Like

3 Stocks on the Fast Track to a Trillion-Dollar Market Cap
RIVN Stock Analysis: Why Rivian’s Momentum Looks Unstoppable
Recession-Proof Riches: 7 Stocks to Buy for Bulletproof Portfolio Growth
NIO Stock Analysis: Why ‘Buying the Dip’ Could Be a Big Mistake
Last Call! 7 Small-Cap Stocks Ready to Explode in Value