4 blue-chip stocks to buy as Dow Seals post October gains – November 1, 2022
US stocks slid on Oct. 31 as investors watch how much the Federal Reserve will raise interest rates this week to tame stubbornly high inflation. Let’s not forget that the Fed’s hawkish stance has dogged the stock market for most of the year. However, despite Monday’s losses, major exchanges were able to lock in their gains for October.
While the S&P 500 and Nasdaq were able to post single-digit gains in October, it was the Dow Jones that soared 14% and recorded its best month since 1976. The blue chip index, in fact, has made a commendable comeback in October and snapped a two-month losing streak. The 30-stock index ended in the green for the month as investors continued to bet on traditional companies such as banks.
More importantly, the blue-chip index primarily includes energy and industrials stocks, which are undoubtedly among the best performing sectors so far this year. Energy shares rose on rising oil prices. In fact, the international benchmark for oil prices – Brent – jumped 7.8% last month.
Incidentally, oil prices have been rising northward mainly due to the Russian-Ukrainian war and the resurgence of the Omicron variant of the coronavirus in China, as all of this has led to a disparity between supply and request. Likewise, industrial shares gained, thanks to a thriving manufacturing sector, which is already driving economic growth across the United States.
Looking at the economy, third quarter GDP grew faster than expected and eased recession fears. In fact, it was the positive first quarter of this year that saw blue chip stocks climb north.
Another reason that led the Dow Jones to post remarkable gains last month was its lack of exposure to mega-cap tech stocks. These stocks, unfortunately, have been beaten lately due to discouraging results.
For example, blue-chip tech stocks like Verizon and Microsoft saw their stocks fall during the month of October. While Verizon reported a decline in subscriber earnings in the third quarter, Microsoft witnessed a slowdown in its cloud computing business.
Still, with the broader blue chip index surging in October, it’s prudent to invest in blue chip stocks that not only gained last month but are also poised to add more earnings, building on strong cash flow and a strong balance sheet. So we’ve selected four of these blue chip stocks that carry a Zacks rank of #2 (buy). You can see the full list of today’s Zacks Rank #1 (Strong Buy) stocks here.
caterpillar (CAT – Free Report) is the world’s largest manufacturer of construction and mining equipment. Zacks’ consensus estimate for its current-year earnings rose 0.9% over the past 60 days. CAT’s projected profit growth rate for the current year is 18%.
JPMorgan Chase & Co. (JPM – Free Report) is one of the world’s largest banks. Zacks’ consensus estimate for its current-year earnings is up 3.2% over the past 60 days. JPM’s expected earnings growth rate for the next five-year period is 5%.
Home deposit (HD – Free Report) is the world’s largest home improvement specialty retailer. Zacks’ consensus estimate for its current-year earnings is up 0.5% over the past 60 days. HD’s expected earnings growth rate for the current year is 7.2%.
Merck & Co. (M.K.R. – Free Report) operates as a worldwide healthcare company. Zacks’ consensus estimate for its earnings next year is up 1.8% over the past 60 days. MRK’s expected profit growth rate for the current year is 22.1%.
Shares of Caterpillar, JPMorgan, Home Depot and Merck gained 31.9%, 20.5%, 7.3% and 17.5%, individually, in October.
Image source: Zacks Investment Research