4 blue chip stocks to buy with strong earnings
Blue chip stocks to buy are the names that continue to deliver for investors. Although stock prices don’t always reflect this reality, companies are still buzzing. Stock price swings are just short-term noise, while the real earnings trend – the business – is what really matters.
We are now buzzing into the second quarter earnings season. In the middle of the reports, we separate the winners from the losers. It’s as much in technology as it is in retail, energy and other sectors.
Again, no matter what the stock market does – maybe there’s still a downward jolt left – we’re getting a glimpse of which companies are doing well right now. These are the companies that grow revenues and profits, manage inflation and supply chains, and navigate the mess of the global economy.
These are the blue chip stocks we want to buy on the downside.
Blue chip stocks to buy: Berkshire Hathaway (BRK.A, BRK.B)
Earlier this week I included Berkshire Hathaway (NYSE:BRK-ANYSE:BRK-B) among the stocks I would buy in the middle of a black swan stock market crash. The reason for this is simple: it is a top notch blue chip stock.
Led by Warren Buffett and Charlie Munger, the Berkshire Company has become one of America’s largest corporations. Weighing in with a market capitalization of around $670 billion, this humble textile company has grown into a massive conglomerate.
The shares trade at a low valuation, management buys back its shares when they trade near or below book value and the group holds more than $100 billion in cash.
which goes well with huge stakes in public companies and a large portfolio of private companies in various sectors, such as freight, energy and insurance. Not to mention that Berkshire can make deals that public investors can’t, often tied to preferred stock and big dividend yields.
Last quarter, its operating income increased 32% sequentially and 39% year-on-year. Clearly, the Oracle of Omaha’s investment plans continue to bear fruit.
Coca-Cola (KO) and PepsiCo (PEP)
Take a few minutes and look at the beverage industry right now. As the rest of the market tries to break out of a bear market, Celsius (NASDAQ:CELH), Keurig Dr Pepper (NASDAQ:KDP), PepsiCo (NYSE:DYNAMISM) and Coca Cola (NYSE:KO) are at or near historic highs.
Focusing on the leaders in this field – PepsiCo and Coca-Cola – these two companies continue to deliver.
In the last trimester, Coca-Cola beat expectations for earnings and revenue, with both rising 11.9% year-on-year to $11.3 billion and beating expectations by more than $700 million. This company is doing gangbusters right now. In addition, Coca-Cola also raised its outlook for the full year, now expecting organic revenue growth of 12% to 13%, compared to growth of 7% to 8% previously.
As for PepsiCo, the drinks and snacks conglomerate also delivered a up and down beat. Revenue grew more slowly than at Coca-Cola, up 5.3%, although the company also raised its full-year revenue outlook. PepsiCo is now reaching unprecedented heights.
It also helps that Pepsi and Coca-Cola pay a decent dividend, currently yielding 2.6% and 2.7%, respectively.
Blue chip stock to buy: Chevron (CVX)
It’s hard to add an energy company to this list, even if it’s as good a company as Chevron (NYSE:CLC) — because the sector can be so volatile. It takes some sort of “golden loop” scenario for these stocks to continue to perform well, including high energy prices and a strong economy. Generally high energy prices have a negative impact on the economy and therefore this can be a double edged sword. Either way, Chevron is worth mentioning.
As the second largest oil company in the United States behind Exxon Mobil (NYSE:XOM), Chevron is mopping up right now amid soaring energy prices. When the company reported earnings last month, the results exceeded expectations.
Earnings of $5.95 per share beat expectations and revenue of $68.7 billion beat estimates of $11 billion while increasing over 82% YOY. Cash flow soared as management increased the upper range of its buyback plan and repaid some debts. Don’t forget that it also pays a dividend yield of 3.6%.
Can the good times last? Analysts expect considerable profit growth this year and a slight decline next year. That leaves stocks trading at just 9.3 times this year’s earnings – and for what that’s worth, consider how low the conservative consensus estimates were for the second quarter.
As of the date of publication, Bret Kenwell had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.