Blue-chip stocks belong to large companies with a track record of consistent financial performance, global presence, and dominant market positions. Their quality management, strong balance sheets, and proven ability to weather market fluctuations make them an ideal choice for investors seeking reliable returns and stability in their investment portfolios.
Given this backdrop, it could be wise to invest in fundamentally strong blue-chip stocks Microsoft Corporation (MSFT), The Procter & Gamble Company (PG), and Johnson & Johnson (JNJ) for stability and growth.
Consumer prices remained unchanged in May, marking the first time since July 2022 that inflation has not increased month-over-month. The Labor Department reported that the Consumer Price Index (CPI) slowed to 3.3% year-over-year, down from 3.4% in April and 3.5% in March. Economists expected a 0.1% monthly gain and a 3.4% annual rate.
Despite the recent stabilization of consumer prices, the overall inflation rate is still higher than the desired target of 2% set by the Federal Reserve. As inflation progress has been slow, the Fed holds interest rates steady and expects just one rate cut in 2024.
Besides, the Gross Domestic Product (GDP) grew by 1.6% during the first quarter, the weakest growth rate since the second quarter of 2022, when the economy experienced a contraction. That was a steep slowdown from a 3.4% rate in the last quarter of 2023 and below the 2.2% rate as projected by economists.
This deceleration in real GDP in the first quarter was due to slower growth in consumption spending, exports, and federal government expenditures.
Given such uncertain economic conditions, blue-chip stocks appear to be one of the best ways to protect your portfolio since they showcase resilience during economic downturns. Blue-chip companies are large, well-established companies with valuable brands, industry-leading businesses, and long track records of stability and profitability.
Given these factors, let’s delve deeper into the fundamentals of top blue-chip stocks: MSFT, PG, and JNJ.
Microsoft Corporation (MSFT)
With a $3.28 trillion market capitalization, MSFT develops and supports software, services, devices, and solutions worldwide. The company operates in Productivity and Business Processes; Intelligent Cloud; and More Personal Computing segments.
On May 8, MSFT announced a broad investment package designed to strengthen the role of Southeast Wisconsin as a hub for AI-powered economic activity, innovation, and job creation. The investments include $3.30 billion in cloud computing and AI infrastructure, creating the country's first manufacturing-focused AI co-innovation lab and an AI skilling initiative.
On April 29, MSFT and Axel Springer SE expanded their multifaceted partnership across advertising, AI, content, and cloud computing. The strategic cooperation aims to leverage cutting-edge innovation to support independent journalism worldwide.
The partnership expands and deepens the existing cooperation of the companies on different levels, where they will leverage each other's strengths in digital publishing and technology to accelerate growth in the era of AI.
Also, on the same day, MSFT announced an innovation initiative with Conduent Incorporated (CNDT), a global technology-led business solutions and services company, to utilize Microsoft Azure OpenAI Service to bring the power of generative AI to drive quality, productivity and faster cycle times for Conduent’s global clients.
MSFT’s total revenues increased 17% year-over-year to $61.86 billion for the third quarter that ended March 31, 2024. The company’s operating income grew 23.4% from the year-ago value to $27.58 billion. Its net income and EPS came in at $21.94 billion and $2.94, indicating growth of 19.9% and 20% from the prior year’s quarter, respectively.
In addition, the company’s total assets were $484.27 billion as of March 31, 2024, versus $411.98 billion as of June 30, 2023.
Street expects MSFT’s revenue and EPS for the fourth quarter (ending June 2024) to increase 14.6% and 9.1% year-over-year to $64.39 billion and $2.93, respectively. Furthermore, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of MSFT have surged 17.8% over the past six months and 32.8% over the past year to close the last trading session at $441.06.
MSFT’s robust growth prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Stability, Sentiment, and Quality. Within the Software - Business industry, MSFT is ranked #19 out of 41 stocks.
Click here to access additional ratings of MSFT for Growth and Momentum.
The Procter & Gamble Company (PG)
With a $389.85 billion market cap, PG offers branded consumer packaged goods internationally. It operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine, & Family Care. It offers conditioners, shampoos, styling aids, and treatments under the Head & Shoulders, Herbal Essences, Pantene, and Rejoice brands.
On May 21, PG expanded its laundry care lineup with Tide Professional Commercial Laundry Detergent and Downy Professional Fabric Softener. With the new launches, removing stains becomes easier, providing softness to linens. These additions help business owners optimize their laundry processes, allowing them to focus on other essential tasks while running their business.
The new product launches are expected to extend the company’s market reach and boost revenue streams.
On May 14, PG unveiled its latest innovation, Swaddlers 360 diapers, designed to transform and simplify diaper changes. The new Swaddlers 360 diapers are equipped with a 360-degree waistband for easy changes and up to 100% leakproof skin protection for babies, ensuring every diaper change remains an easy, cherished bonding moment.
For the third quarter that ended March 31, 2024, PG’s net sales increased marginally year-over-year to $20.19 billion. Its gross profit grew 7% from the year-ago value to $10.34 billion. The company’s operating income was $4.46 billion, indicating a growth of 5% from the prior year’s quarter.
In addition, the company’s net earnings came in at $3.78 billion and $1.52, up 10% and 11% from the prior year’s quarter, respectively.
According to the fiscal year 2024 guidance, PG expects its all-in sales growth to be in the range of 2% to 4% from the prior year. The company also expects organic sales growth in the range of 4% to 5%.
Analysts expect PG’s revenue and EPS for the first quarter (ending September 2024) to increase 2.4% and 5.9% year-over-year to $22.40 billion and $1.94, respectively. Moreover, the company has topped the consensus EPS estimates in all four trailing quarters.
PG’s shares have gained 13.2% over the past six months and 13.6% over the past year to close the last trading session at $165.18.
PG’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Stability and a B for Sentiment and Quality. Within the B-rated Consumer Goods industry, PG is ranked #16 among 51 stocks.
In addition to the POWR Ratings we’ve stated above, we also have PG ratings for Momentum, Growth, and Value. Get all PG ratings here.
Johnson & Johnson (JNJ)
With a $348.09 billion market cap, JNJ researches, develops, and sells various products in the healthcare field. The company operates in the Innovative Medicine and MedTech segments. It offers products for various therapeutic areas, like immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis.
On May 31, JNJ completed the acquisition of Shockwave Medical, which has now become a part of JNJ and will operate as a business unit within Johnson & Johnson MedTech.
The strategic acquisition strengthens JNJ’s position in the highest-growth, innovation-oriented segments of cardiovascular intervention. It also creates a greater opportunity to transform the treatment landscape for cardiovascular disease.
On May 28, JNJ entered a definitive agreement to acquire Yellow Jersey Therapeutics, a wholly-owned subsidiary of Numab, to be spun off to Numab's shareholders. According to the terms of the acquisition, JNJ will be paying a purchase price of $1.25 billion in cash for YJT, which holds NM26 rights
NM26 is a Phase 2-ready, investigational, first-in-class bi-specific antibody for treating atopic dermatitis (AD). Post-acquisition, JNJ will gain full rights to develop, manufacture, and commercialize NM26 globally to treat atopic dermatitis and follow-on indications.
JNJ’s reported sales for the first quarter that ended March 31, 2024, increased 2.3% from the prior year’s quarter to $21.38 billion, of which its sales from the US region grew 7.8% from the year-ago value to $11.62 billion. Its gross profit of $14.87 billion indicates a growth of 4.7% year-over-year.
Furthermore, the company’s adjusted net earnings came in at $6.58 billion and $2.71 per share, up 3.8% and 12.4% from the prior year’s quarter, respectively.
Analysts expect JNJ’s EPS for the fourth quarter (ending December 2024) to increase 10.1% year-over-year to $2.52, and its revenue is estimated to increase 5.5% year-over-year to $22.58 billion for the same quarter. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
JNJ’s stock has plunged 3.6% over the past month to close the last trading session at $145.41.
JNJ’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
JNJ has an A grade for Quality. It also has a B grade for Value, and Stability. It is ranked #12 among the 154 stocks in the Medical - Pharmaceuticals industry.
Click here to access additional JNJ ratings for Sentiment, Momentum, and Growth.
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MSFT shares were trading at $442.25 per share on Thursday morning, up $1.19 (+0.27%). Year-to-date, MSFT has gained 18.04%, versus a 14.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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