Take A Look At These 3 Blue Chips As Market Volatility Continues
Blue chip stocks are attractive to long-term investors for a number of reasons. These are companies that tend to have steady cash flows, appealing financial positions, and established businesses with a long history of success.
They can also offer appealing dividend payments and provide a sense of added confidence to investors since they are often some of the most well-known companies in the world. Blue chip stocks are even more attractive in a market environment like we are seeing at the moment.
As equities continue to pull back and start to enter into correction territory, investors can consider using the volatility as an opportunity to buy shares of these fantastic companies at intriguing price levels.
These are the types of businesses that investors can hold onto for the long-term, which means adding shares on significant market weakness could be a very rewarding move.
Let’s take a look at the top 3 blue-chip stocks to bank on long-term:
1. Coca-Cola
It’s nothing short of impressive that Coca-Cola (NYSE:KO) shares are trading at all-time highs while the stock market is facing heavy selling pressure, which should tell investors all they need to know about the quality of the company.
It’s the world’s largest soft drink company and the owner of some of the most recognizable brand names in the world, including Coke, Fanta, Sprite, Smartwater, Canada Dry, Dr. Pepper, and more.
Coca-Cola is also the largest producer of juice and juice-related products and has been in business for over 130 years, which is the type of staying power that long-term investors love to see.
The stock is worth a look at this time for a few different reasons, even at all-time highs. The company has rosy business prospects in 2022 as on-premise sales resume following the pandemic, as Coca-Cola sells a ton of beverages in public settings like movie theaters, restaurants, and concert venues.
Many analysts also believe that the company’s multi-billion dollar IRS tax case will be resolved in the coming months, which would be a strong positive for prospective investors that have been waiting for clarity.
Finally, a 2.76% dividend yield and Q3 adjusted EPS of $0.65 per share, up 18% year-over-year, are additional reasons why this blue chip beverage giant is a very attractive stock to consider adding in 2022.
2. Hormel Foods
Companies with a strong competitive position and a history of rewarding shareholders are exactly the types of stocks investors should be looking for at the moment, and Hormel Foods (NYSE:HRL) fits the bill. It’s a multinational manufacturer and marketer of food and meat products, including fresh meats, sausages, bacon, luncheon meats, peanut butter, microwaveable meals, poultry, and more.
These are products that consumers will always be interested in buying, which means the company is easy to count on for consistent earnings and dividend payments. Speaking of dividends, Hormel is a dividend aristocrat stock with over 56 consecutive years of dividend raises.
Hormel is also a blue chip name that has some nice growth opportunities, as the company could expand into international markets in the coming years. In fact, the company acquired a Brazilian meats company called Ceratti back in 2017 which has helped Hormel gain exposure to the South American market.
Investors should keep an eye on the company's earnings in 2022, as the foodservice industry should make a nice recovery and lead to stronger sales volumes for Hormel.
3. Microsoft
We know tech stocks are in trouble at the moment with the prospect of multiple interest rate hikes on the horizon as the Fed tries to combat inflation, but these circumstances might provide an incredible buying opportunity in a blue chip software giant like Microsoft (NASDAQ:MSFT).
It’s one of the strongest businesses in the world and a company that has plenty of favorable trends that investors can count on for long-term growth. For example, the company’s Microsoft Azure cloud business has been on fire as more companies pursue digital transformations following the pandemic. Investors can also rely on Microsoft's incredibly solid office productivity software like Microsoft Office to continue generating stable cash flows for years to come.
Microsoft recently announced plans to acquire leading videogame company Activision Blizzard (NASDAQ:ATVI) in an all-cash transaction, which is a strategic move that should help the company further cement its status as a leader in the gaming industry.
Microsoft’s XBOX Series X has been a best-seller since its release, and the Activision acquisition should dramatically improve the company’s subscription gaming service XBOX Game Pass over the long run.
While the stock is closing in on the 200-day moving average and could continue facing selling pressure in the coming months, it’s safe to say that Microsoft shares are getting more and more attractive for long-term buyers with every tick down.