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3 Blue-Chip Stocks to Buy for Safety on Renewed Coronavirus Worries
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All three major U.S. indexes suffered big losses Thursday after reports of upticks in coronavirus cases, as the U.S. economy slowly reemerges from its pandemic lockdown. The Dow fell nearly 7% for its worse day since March, while the S&P 500 and the Nasdaq slipped 5.9% and 5.3%, respectively.
Wall Street has for months been looking beyond the coronavirus downturn to the eventual recovery. In fact, last Friday’s better-than-expected May jobs data helped justify investor optimism. But things might have overheated a bit too quickly after the tech-heavy Nasdaq surged to new highs and the S&P 500 broke into positivity territory for the year.
Thursday’s selloff could have been just a good opportunity for investors to take home some profits, with giants like Amazon (AMZN - Free Report) hitting new highs earlier in the week. And the S&P 500 is still up roughly 35% from the market’s March 23 lows and hovered above 3,000 Friday morning.
That said, the Fed noted that the economic recovery could take years, which added to the recent worries. At the same time, the central bank indicated that interest rates could remain near zero through 2022. This means investors will have to find returns somewhere. Plus, economists said in a new Wall Street Journal survey that the U.S. economy will likely be in recovery by the third quarter.
Uncertainty is clearly poised to remain and the rally was never going to continue uninterrupted. So investors might want to consider taking refuge in blue-chip stocks that pay a dividend and provide strong longer-term potential…
Microsoft has been a must-own stock for the last several years, outpacing all of the so-called FAANG stocks in the past two years and only barely lagging Netflix (NFLX - Free Report) over a three-year stretch. MSFT is up 20% in 2020 to crush the tech sector’s 4% climb and it currently rests about 5% off its recent highs. The tech giant’s run, which has it approaching a $1.5 trillion market cap, has been driven by cloud computing expansion. MSFT is now a leader within the booming growth industry, with its quarterly Intelligent Cloud revenue up 27% for the second period in a row.
Microsoft’s cloud division pulled in the most of its three units in Q3 FY20, but its Office-heavy Productivity and Business Processes divisions continue to grow as well. The firm’s Office 365 suite remains vital to businesses, governments, schools, and consumers, and its Teams business is tailor-made for the current stay-at-home environment, as it fends off smaller rivals Slack and Zoom (ZM - Free Report) . And let’s not forget its consumer electronics and video gaming businesses.
Microsoft is positioned to weather nearly any economic storm, as it held over $137 billion in cash and equivalents at the end of last quarter. It has also bought back a ton of stock and it continues to raise its dividend payout, with its current 1% yield well above the 10-year U.S. Treasury note. Our Zacks estimates call for MSFT’s revenue to jump 12.5% this year and another 10% next year. Meanwhile, its adjusted EPS figures are projected to surge 20% and 9.4%, respectively. Microsoft is currently a Zacks Rank #3 (Hold) that sports “B” grades for both Growth and Momentum in our Style Scores system.
Home Depot has shined during the coronavirus lockdown period as shoppers continue to spend at the home improvement powerhouse deemed an essential business. HD’s first quarter revenue, reported on May 19, jumped 7.1%, with comps up 6.4%. This growth came on top of the year-ago period’s nearly 6% top-line expansion. HD also showcased its growing e-commerce business, with digital platforms sales up by roughly 80%, driven by buy online and pick up in store. HD noted on its earnings call that “sales of both our DIY and Pro customers grew during the quarter with DIY sales growing faster than Pro sales.”
Home Depot’s costs did rise during the quarter as it boosted pay and benefits for workers, which could help it retain the best employees now and in the future. HD’s second quarter revenue is projected to climb 5.8%, with its FY20 sales projected to jump 3.7% to $114.32 billion. The firm’s adjusted quarterly earnings are projected to pop 1.3% in the second quarter. Meanwhile, its full-year EPS figure is expected to sink just 3.80%, with FY21 projected to surge over 11% higher.
Home Depot has experienced mixed earnings revisions recently to help it hold a Zacks Rank #3 (Hold). HD is also part of a highly-ranked Zacks industry and grabs a “B” grade for Growth and an “A” for Momentum. On top of that, HD shares are up 11% in 2020 and nearly 60% in the last three years to crush the S&P 500’s 24% climb. Plus, its 2.48% dividend yield tops rival Lowe’s (LOW - Free Report) 1.73% and the S&P 500’s 1.90%. Home Depot appears to be a solid retail stock to own during the coronavirus uncertainty and beyond.
Apple is another seemingly all too easy of a pick that’s working its way back to something close to normal in China and slowly reopening its stores in the U.S. and elsewhere. The Wall Street Journal and other outlets did report that Apple is pushing back the production ramp up of its next iPhone. And the firm clearly faces the potential for more possible setbacks and reduced demand for its high-priced iPhone.
That said, Apple’s Q2 revenue topped our estimates and popped 0.50%, once again driven by its non-iPhone businesses. This includes its services and wearables division, which surged 17% and 23%, respectively. Meanwhile, AAPL’s adjusted earnings jumped 3.7%. Perhaps more importantly during these uncertain times, Apple closed the quarter with $83 billion in net cash. The tech titan also raised its dividend by 6%, with its yield resting at 0.98%, and it authorized a $50 billion increase to its stock buyback program.
Apple’s fiscal 2020 revenue it projected to climb nearly 1%, with its adjusted earnings set to jump 3.5%. Peeking further ahead, Apple’s FY21 earnings consensus has climbed recently, with its adjusted FY21 EPS figure projected to jump 24% above our FY20 estimate on 14.5% higher sales. AAPL shares are up 15% in 2020 and it recently hit new all-time highs. Apple is currently a Zacks Rank #3 (Hold) and it remains one of the safer plays on Wall Street.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
3 Blue-Chip Stocks to Buy for Safety on Renewed Coronavirus Worries
All three major U.S. indexes suffered big losses Thursday after reports of upticks in coronavirus cases, as the U.S. economy slowly reemerges from its pandemic lockdown. The Dow fell nearly 7% for its worse day since March, while the S&P 500 and the Nasdaq slipped 5.9% and 5.3%, respectively.
Wall Street has for months been looking beyond the coronavirus downturn to the eventual recovery. In fact, last Friday’s better-than-expected May jobs data helped justify investor optimism. But things might have overheated a bit too quickly after the tech-heavy Nasdaq surged to new highs and the S&P 500 broke into positivity territory for the year.
Thursday’s selloff could have been just a good opportunity for investors to take home some profits, with giants like Amazon (AMZN - Free Report) hitting new highs earlier in the week. And the S&P 500 is still up roughly 35% from the market’s March 23 lows and hovered above 3,000 Friday morning.
That said, the Fed noted that the economic recovery could take years, which added to the recent worries. At the same time, the central bank indicated that interest rates could remain near zero through 2022. This means investors will have to find returns somewhere. Plus, economists said in a new Wall Street Journal survey that the U.S. economy will likely be in recovery by the third quarter.
Uncertainty is clearly poised to remain and the rally was never going to continue uninterrupted. So investors might want to consider taking refuge in blue-chip stocks that pay a dividend and provide strong longer-term potential…
Microsoft (MSFT - Free Report)
Microsoft has been a must-own stock for the last several years, outpacing all of the so-called FAANG stocks in the past two years and only barely lagging Netflix (NFLX - Free Report) over a three-year stretch. MSFT is up 20% in 2020 to crush the tech sector’s 4% climb and it currently rests about 5% off its recent highs. The tech giant’s run, which has it approaching a $1.5 trillion market cap, has been driven by cloud computing expansion. MSFT is now a leader within the booming growth industry, with its quarterly Intelligent Cloud revenue up 27% for the second period in a row.
Microsoft’s cloud division pulled in the most of its three units in Q3 FY20, but its Office-heavy Productivity and Business Processes divisions continue to grow as well. The firm’s Office 365 suite remains vital to businesses, governments, schools, and consumers, and its Teams business is tailor-made for the current stay-at-home environment, as it fends off smaller rivals Slack and Zoom (ZM - Free Report) . And let’s not forget its consumer electronics and video gaming businesses.
Microsoft is positioned to weather nearly any economic storm, as it held over $137 billion in cash and equivalents at the end of last quarter. It has also bought back a ton of stock and it continues to raise its dividend payout, with its current 1% yield well above the 10-year U.S. Treasury note. Our Zacks estimates call for MSFT’s revenue to jump 12.5% this year and another 10% next year. Meanwhile, its adjusted EPS figures are projected to surge 20% and 9.4%, respectively. Microsoft is currently a Zacks Rank #3 (Hold) that sports “B” grades for both Growth and Momentum in our Style Scores system.
Home Depot (HD - Free Report)
Home Depot has shined during the coronavirus lockdown period as shoppers continue to spend at the home improvement powerhouse deemed an essential business. HD’s first quarter revenue, reported on May 19, jumped 7.1%, with comps up 6.4%. This growth came on top of the year-ago period’s nearly 6% top-line expansion. HD also showcased its growing e-commerce business, with digital platforms sales up by roughly 80%, driven by buy online and pick up in store. HD noted on its earnings call that “sales of both our DIY and Pro customers grew during the quarter with DIY sales growing faster than Pro sales.”
Home Depot’s costs did rise during the quarter as it boosted pay and benefits for workers, which could help it retain the best employees now and in the future. HD’s second quarter revenue is projected to climb 5.8%, with its FY20 sales projected to jump 3.7% to $114.32 billion. The firm’s adjusted quarterly earnings are projected to pop 1.3% in the second quarter. Meanwhile, its full-year EPS figure is expected to sink just 3.80%, with FY21 projected to surge over 11% higher.
Home Depot has experienced mixed earnings revisions recently to help it hold a Zacks Rank #3 (Hold). HD is also part of a highly-ranked Zacks industry and grabs a “B” grade for Growth and an “A” for Momentum. On top of that, HD shares are up 11% in 2020 and nearly 60% in the last three years to crush the S&P 500’s 24% climb. Plus, its 2.48% dividend yield tops rival Lowe’s (LOW - Free Report) 1.73% and the S&P 500’s 1.90%. Home Depot appears to be a solid retail stock to own during the coronavirus uncertainty and beyond.
Apple (AAPL - Free Report)
Apple is another seemingly all too easy of a pick that’s working its way back to something close to normal in China and slowly reopening its stores in the U.S. and elsewhere. The Wall Street Journal and other outlets did report that Apple is pushing back the production ramp up of its next iPhone. And the firm clearly faces the potential for more possible setbacks and reduced demand for its high-priced iPhone.
That said, Apple’s Q2 revenue topped our estimates and popped 0.50%, once again driven by its non-iPhone businesses. This includes its services and wearables division, which surged 17% and 23%, respectively. Meanwhile, AAPL’s adjusted earnings jumped 3.7%. Perhaps more importantly during these uncertain times, Apple closed the quarter with $83 billion in net cash. The tech titan also raised its dividend by 6%, with its yield resting at 0.98%, and it authorized a $50 billion increase to its stock buyback program.
Apple’s fiscal 2020 revenue it projected to climb nearly 1%, with its adjusted earnings set to jump 3.5%. Peeking further ahead, Apple’s FY21 earnings consensus has climbed recently, with its adjusted FY21 EPS figure projected to jump 24% above our FY20 estimate on 14.5% higher sales. AAPL shares are up 15% in 2020 and it recently hit new all-time highs. Apple is currently a Zacks Rank #3 (Hold) and it remains one of the safer plays on Wall Street.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>