Unbeatable Blue Chips: 7 Must-Own Stocks for Every Portfolio (2024)

Blue Chip stocks are among the most dependable investments available. For that reason many investors believe them to be an unbeatable investment overall. Investing in the equity of large, stable companies with excellent reputations has long been a successful strategy.

Every portfolio should include blue chip stocks. Such shares tend to be highly immune to market downturns, though not invincible. The household names these stocks represent tend to hold value through thick and thin and grow over time. Those factors suggest that investors will win by investing in blue chips much more often than they will lose.

That’s the general sales pitch for broadly investing in Blue Chip stocks. However, there are certain shares among this elite grouping that are exceptionally attractive. Let’s look at seven such must own shares for every portfolio.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) is one of the best positioned stocks for the present and the future. The company has established an impressive business with cloud and AI opportunities that will persist. Microsoft is incredibly well funded and has the resources to shape markets.

It is among the most important firms globally. That assertion is evidenced by its $3.1 billion market capitalization which makes it the most valuable firm overall.

Microsoft is really all about the cloud. The cloud represents massive AI opportunities. The point here is thatMicrosoft’s Cloud revenues stand to grow moving forward because of AI. However, it’s also important to note that its Cloud revenues are currently very strong. The company reported $33.7 billion in Cloud revenues in the most recent quarter. That accounted for more than half of the company’s $62 billion in sales.

Long story short, Microsoft is poised to continue to grow quickly while remaining stable. It’s a blue chip stock that remains unparalleled.

Exxon Mobil (XOM)

Exxon Mobil (NYSE:XOM) is one of a few go to blue chip energy stocks that most investors will be exposed to. I’d like to make a comparison here between Exxon Mobil and Chevron (NYSE:CVX), another blue chip energy stock. For investors choosing between the two, Exxon Mobil makes more sense.

Investors who choose either stock will be doing so for income. Exxon Mobil is at a slight disadvantage relative to Chevron given that its dividend yield is roughly 0.5% lower, at 3.3%.

However, ExxonMobil really shines when it comes to the comparison between returns on invested capital. The company has a historical return on invested capital above 11.2%. That capital costs the company roughly 6.4%. That’s a difference of 4.8% meaning the company invests wisely. Chevron, by contrast, only has a difference of 0.6%.

Exxon Mobil has proven to be better at investing capital than Chevron. I believe this will matter as both firms navigate the green energy transition. It stands to reason that XOM should benefit as a result. Both are good choices among blue chip stocks but I would give the advantage to XOM for the reason I’ve just outlined.

Pfizer (PFE)

Pfizer (NYSE:PFE) is an excellent example of one of the reasons investors often choose blue chip stocks: They believe they will persist even in the worst of times. Make no mistake about it, Pfizer is currently undergoing a period of weakness.

The story’s been told hundreds of times, so I’ll quickly restate: Revenues eclipsed $100 billion in 2022 on its covid-19 vaccine success. Sales will be somewhere in the neighborhood of $60 billion this year.

That’s the base case, $60 billion in sales in 2024. The company could surprise especially if it makes progress on its orally administered weight loss drug. However, that’s simply too difficult to state to any degree of accuracy.

Instead, consider that Pfizer is developing a portfolio of therapeutics and technology including antibody-drug conjugates. The pandemic victory gave the company a lot of cash that it wouldn’t otherwise have had. Pfizer is still one of the biggest pharma companies globally and is highly likely to persist and rebound over the next few years. Now may be the best opportunity to buy the blue chip.

Amazon (AMZN)

Amazon (NASDAQ:AMZN) is a blue chip stock best-known for its e-commerce Marketplace and its cloud computing business. Those two segments continue to be the primary drivers of the company. Their strength is the primary reason it has become a blue chip stock. Yet, investors should also consider other segments of Amazon’s business as well. They currently provide an extra boost to what is already an excellent stock.

Amazon is investing in advertising and continuing to grow Prime Video. Furthermore, Amazon just announced that it has invested an additional $2.75 billion into Anthropic, the AI start up. That brings Amazon’s total investment in Anthropic to $4 billion. By comparison, Microsoft invested more than $10 billion into OpenAI. Regardless of the relative size, the investment shows that Amazon is serious about catching up in the generative AI race.

Amazon is one of the “Magnificent Seven” and is likely to be stable while growing quickly based on its past decade-long history.

Visa (V)

Visa (NYSE:V) absolutely should be classified amongst unbeatable Blue Chips stocks. Why should investors believe this? Consider that an average investment in the S&P 500 is expected to double in value every 6 to 7 years.

Over a decade that would turn $10,000 into roughly $30,000. Consider also that over the past decade $10,000 invested into Visa would yield more than $53,000 today. Visa continues to outpace average stocks and has long been one of the best blue chip Investments available.

The company continues to do very well particularly in light of increasing credit card debt in the United States. Credit card debt recently reached a historical highs and is expected to continue to grow. That should be a boon to the company which is the world’s second largest issuer of credit cards, behind China’s Union Pay.

Visa also comes with a modest dividend yielding 0.75%. That provides a nice boost to what are already phenomenal growth rates which is why investors should expect shares to continue to compound.

Walmart (WMT)

Walmart (NYSE:WMT) is often compared against the other retail giant on this list, Amazon. Both chairs are absolutely deserving of a place among the stocks in any portfolio. However, let’s look at how they compare into critical areas and what Walmart is doing to catch up and modernize.

Walmart continues to lag behind Amazon in terms of e-commerce spending. It’s not even close really. Amazon accounts for more than 53% of all e-commerce retail spending while Walmart is far behind, with 6.8%. Each company accounts for approximately 8% and 7% of all retail spending, respectively. That’s a strong reason to consider investing in both firms.

Walmart has made significant strides in relation to e-commerce. The company is again battling with Amazon as both vie for dominance in virtual try-on technology.

Both firms are going to continue to dominate retail and contribute to a significant portion of consumer spending. Thus, they are vital parts of the primary driver of the American economic engine. That makes both must-own blue chip stocks.

ASML (ASML)

ASML (NASDAQ:ASML) stock benefits from a strong moat and position that few other firms experience. The company is one of one essentially, and dominates the extreme ultraviolet (EUV) lithography business.

ASML sells massive lithography machines costing hundreds of millions of dollars. It cornered the market on those machines and essentially has a monopoly over the sector. That’s generally the reason that investors are continuously interested in ASML shares. However, they are becoming perhaps even more attractive given opportunities in high bandwidth memory. Leading chip companies are undertaking a strong push to increase high bandwidth memory production which is critical to the manufacture of AI chips.

Companies including Korean leaders Samsung and SK Hynix as well as Micron (NASDAQ:MU) are expected to produce more HBM chips. That should push up demand for the ultraviolet lithography machines that ASML produces. ASML may not be a household name but it is a very steady firm with a dominant position. It is a blue chip stock in every sense of the word.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.