Investors seeking consistent, long-term returns in today’s volatile markets gravitate towards blue-chip stocks. These companies are renowned for their stability, robust financial health, and sustained growth over time, making them reliable pillars during uncertain times.
Given this backdrop, I have highlighted three fundamentally strong blue-chip stocks: Walmart Inc. (WMT), The Procter & Gamble Company (PG), and AstraZeneca PLC (AZN) for investors seeking long-term stability.
In May, consumer prices remained unchanged for the first time since July 2022, with the Consumer Price Index (CPI) slowing to 3.3% year-over-year. This is a decrease from 3.4% in April and 3.5% in March. Despite this moderation, inflation remains above the Federal Reserve’s target of 2%. The Fed has kept interest rates steady and expects only one rate cut in 2024.
Additionally, Gross Domestic Product (GDP) grew by 1.6% in the first quarter, the weakest growth rate since the second quarter of 2022, when the economy contracted. This was a significant drop from the 3.4% growth rate in the last quarter of 2023 and below the 2.2% projected by economists. The slowdown was driven by reduced growth in consumer spending, exports, and federal government expenditures.
Given the economic uncertainty, particularly with inflation still above target, speculative stocks face heightened risks. In contrast, blue-chip stocks offer stability, value, and diversification, shielding investments from potential downturns.
With that in mind, let’s take a closer look at the featured stocks to evaluate their fundamentals.
Walmart Inc. (WMT)
Retail giant WMT operates supercentres, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, membership-only warehouse clubs, and e-commerce websites, including walmart.com and Walmart.com.mx flipkart.com, and others. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
Recently, the company announced its biggest savings event, “Walmart Deals,” featuring discounts on thousands of items, including back-to-school essentials, tech, toys, outdoor, and travel gear. Scheduled from July 8 to July 11, the event is expected to boost sales across various categories significantly.
Moreover, with early access for Walmart+ members, the event aims to attract more shoppers, drive membership subscriptions, enhance customer loyalty, and increase long-term revenue.
In February 2024, the company raised its dividend by 9% year-over-year to $0.83 per share on a post-stock split basis ($2.49 per share on a pre-split basis), underscoring its commitment to rewarding shareholders.
WMT’s four-year average dividend yield is 1.52%, while its annual dividend translates to a 1.20% yield on prevailing prices. Its dividend has grown at a 3% CAGR over the past three years and a 2.6% CAGR over the past five years. Further, this hike marked the company’s 51st consecutive year of dividend growth.
For the fiscal first quarter that ended April 30, 2024, WMT’s total revenues increased 6% year-over-year to $161.51 billion, driven by a 21% increase in global e-commerce sales. Its adjusted operating income grew 13.7% from the year-ago value to $7.09 billion, while its adjusted EPS came in at $0.60, up 22.4% year-over-year. Also, the company’s attributable net income improved from $1.67 billion in the previous year to $5.10 billion.
Street expects WMT’s revenue for the second quarter (ending July 2024) to increase 4.3% year-over-year to $167.18 billion. Its EPS for the current quarter is expected to grow 4.9% from the prior-year period to $0.64. Moreover, the company surpassed the revenue and EPS estimates in each of the trailing four quarters, which is promising.
Shares of WMT have gained 31.9% over the past nine months to close the last trading session at $68.90. Also, it has a five-year monthly beta of 0.52, indicating comparative stability than the broader market.
WMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also has an A grade for Stability and Sentiment and a B for Momentum. Among the 36 stocks in the A-rated Grocery/Big Box Retailers industry, it is ranked #10. Click here to see WMT’s rating for Growth, Value, and Quality.
The Procter & Gamble Company (PG)
PG offers branded consumer packaged goods to consumers across the world. It operates through Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care segments.
On May 15, the company paid a quarterly dividend of $1.0065 per share on the Common Stock and the Series A and Series B ESOP Convertible Class A Preferred Stock of PG, marking a 7% increase from the prior quarter.
PG has raised its dividends for 68 consecutive years. It pays a $4.03 per share dividend annually, which translates to a 2.39% yield on the current price. Its four-year average dividend yield is 2.41%. Over the past three and five years, PG’s dividend payments have grown at CAGRs of 5.7% each.
PG’s net sales for the fiscal third quarter that ended March 31, 2024, increased marginally year-over-year to $20.20 billion. Its gross profit grew 7% from the year-ago value to $10.34 billion, while its operating income rose 5% from the prior year’s quarter to $4.46 billion.
In addition, its net earnings attributable to PG amounted to $3.75 billion or $1.52 per share, reflecting an 11% year-over-year increase. Also, the adjusted free cash flow for the quarter stood at $3.29 billion.
Analysts expect the company’s EPS and revenue for the fiscal fourth quarter ending June 2024 to increase marginally year-over-year to $1.37 and $20.91 billion, respectively. Furthermore, PG topped the consensus EPS in each of the four trailing quarters, which is excellent.
The stock has gained 15.9% over the past six months to close the last trading session at $168.45. It has a five-year monthly beta of 0.41.
PG’s stance is apparent in its POWR Ratings. The stock has an A grade for Stability and a B for Quality. Within the B-rated Consumer Goods industry, it is ranked #27 out of 53 stocks.
Click here to see the additional ratings of PG (Growth, Value, Momentum, and Sentiment).
AstraZeneca PLC (AZN)
Headquartered in Cambridge, the United Kingdom, AZN is a renowned biopharmaceutical company focusing on discovering, developing, manufacturing, and commercializing prescription medicines. Its marketed products treat oncology, COVID-19, respiratory, cardiovascular, renal, and metabolism diseases, etc.
On June 4, AZN acquired Fusion Pharmaceuticals Inc., a clinical-stage biopharmaceutical company specializing in next-generation radioconjugates (RCs). The acquisition strengthens the company’s oncology portfolio with Fusion’s innovative RC pipeline, including FPI-2265 for metastatic castration-resistant prostate cancer (mCRPC).
It also enhances AZN’s expertise in RCs and expands its R&D, manufacturing, and supply chain capabilities while bolstering its presence in Canada.
AZN’s four-year average dividend yield is 2.34%, while its annual dividend of $1.97 translates to a 2.48% yield on prevailing prices.
For the first quarter that ended March 31, 2024, AZN’s total revenue increased 16.5% year-over-year to $12.68 billion, while its gross profit rose 16.6% from the year-ago value to $10.46 billion. The company’s profit for the period and EPS amounted to $2.18 billion and $1.41, representing increases of 20.8% and 21.6% from the prior-year quarter, respectively. In addition, its operating profit stood at $2.55 billion, up 22.2% year-over-year.
The consensus EPS estimate of $1.08 for the third quarter (ending September 2024) represents a 24.3% improvement year-over-year. The consensus revenue estimate of $12.97 billion for the same period indicates a 12.9% increase from the prior-year period. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.
AZN’s shares have gained 19.8% over the past three months to close the last trading session at $79.37. It has a five-year monthly beta of 0.17.
It’s no surprise that AZN has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and Stability and a B for Quality. Out of 154 stocks in the Medical - Pharmaceuticals industry, it is ranked #4.
In addition to the POWR Ratings we’ve stated above, we also have AZN’s ratings for Value, Momentum, and Sentiment. Get all AZN ratings here.
What To Do Next?
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WMT shares were trading at $66.98 per share on Tuesday morning, down $1.92 (-2.79%). Year-to-date, WMT has gained 28.33%, versus a 14.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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