The bull market shows no signs of slowing down as markets swiftly rebound from a minor 5% correction in April, reaching new heights. With a significant amount of cash still on the sidelines, every shallow correction has become a buying opportunity, driving further market growth. For investors looking to capitalize on this positive momentum, blue-chip stocks offer a reliable option.
Historical Context and Market Outlook
From a historical perspective, the markets are positioned for continued gains. In the first 100 trading days of 2024, the S&P 500 has achieved an impressive 10% gain. According to JPMorgan Wealth Management, since 1950, such strong early performance often leads to an even stronger second half of the year, with the index closing the year with an average return of 25%.
Economic and Earnings Support
The economic landscape and earnings data further support this optimistic outlook. Economic activity has shown resilience, bolstered by fiscal programs aimed at infrastructure development and reshoring supply chains to the United States. Corporate earnings have also exceeded expectations, with analysts projecting additional gains in the second half of the year. This convergence of positive economic and technical factors suggests that the market’s upward trajectory is likely to continue.
Top Blue-Chip Stocks to Consider
Abbott Laboratories (ABT)
Abbott Laboratories, a leading medical device and nutrition company, presents a compelling investment opportunity. Trading at 22 times forward EPS with a 2% dividend yield, it exemplifies a ‘get-rich-slowly’ strategy. Most of Abbott’s segments are performing well, with the exception of the diagnostic segment, which had previously benefited from COVID-19-related sales. As it moves past these comparisons, upcoming quarters are expected to improve.
In Q1 2024, Abbott’s nutrition business achieved 7.7% organic revenue growth year-over-year, with established pharmaceuticals and medical devices showing even stronger growth at 13.7% and 14.3%, respectively. Total reported revenues for Q1 2024 rose 2.2% to $9.9 billion, with organic revenue growth at 4.7%. Excluding COVID-19 testing impacts, sales growth was 10.8%. For fiscal year 2024, Abbott has raised its guidance, now expecting adjusted diluted EPS of $4.55 to $4.70, driven by double-digit growth in medical devices and established pharmaceuticals.
Blackstone (BX)
Blackstone, a premier private equity firm, is renowned for its strategic foresight and adaptability, making it a top choice among blue-chip stocks. As the largest real estate manager globally, Blackstone has skillfully navigated market shifts, such as divesting from commercial real estate in favor of industrial properties like warehouses. Currently managing over $1 trillion in assets, Blackstone is well-positioned to leverage its scale and brand to dominate in real estate.
With a focus on the lucrative private wealth market, Blackstone targets an $80 trillion opportunity, owning 230 companies worldwide. The firm aims to become the leading capital provider, with $329.6 billion in assets under management in its credit and insurance segment. This strategic positioning ensures continued growth in recurring revenue and strong cash flow, making Blackstone a standout blue-chip stock.
Estée Lauder (EL)
Estée Lauder, a premium beauty brand, offers a turnaround opportunity despite lagging in the current bull market. Over the past two years, Estée Lauder has faced issues, including market share loss in the U.S. and unmet expectations in China, resulting in a 10% sales decline and a 57% drop in net income for the fiscal year ending June 30, 2023. However, the company’s Q3 FY2024 results show signs of recovery, with sales growing 5% year-over-year to $3.9 billion and operating income rising by 79% to $531 million, driven by the recovery in Asia travel retail organic sales.
Management projects accelerating momentum in organic sales growth in Q4 FY2024, positioning the second half of 2024 as a turning point for operating profits. With Estée Lauder stock 65% below its December 2021 highs, the company’s turnaround presents a significant upside potential.
Conclusion
As the bull market continues, blue-chip stocks like Abbott Laboratories, Blackstone, and Estée Lauder offer promising opportunities for investors. These companies, with their strong fundamentals and strategic positioning, are well-equipped to ride the market’s upward trajectory, providing substantial gains in the process. Investors should consider these stocks to capture the benefits of the current market momentum and secure their financial future.
