In this article, we will look at the 10 best blue-chip stocks under $100.
We all are wondering only one thing: Is the U.S. economy headed for a no, soft, or hard landing?
The re-acceleration (or the no-landing) case is being advocated by strong job growth, healthy double-digit expectations for growth in corporate earnings, and inflation remaining above 2.5%. On the other hand, the potential for a soft landing or (below-trend growth) is supported by a slowdown in forward-looking labor market indicators. Such indicators include hiring rates and subdued wage growth which might weigh over real household incomes.
Finally, the case for a hard landing (recession, as you might say) depends on historical precedent. A sustained period of aggressive tightening might push the economy into recession. However, there is enough evidence that the US economy continues to slow and inflation pressure is easing.
Soft Landing or Recession- The Debate Continues
As of now, investors continue to debate between a soft landing or a recession. The macro data is not of much help. This is because a slowdown can be perceived in 2 ways: Firstly, it can be assumed as a healthy rebalancing which enables inflation to cool without prompting negative growth, and secondly, the path to a not-so-severe recession starting in the latter half of 2024 or early 2025.
The broader financial markets are hinting at the soft-landing scenario. This is evident given the optimism about earnings-growth expectations. Apart from this optimism, there is optimism around high-yield credit spreads which are pricing cyclically low levels of defaults.
The conditions are improving in several developed economies, with some positive news coming from China. China’s outlook seems to be brightening with the implementation of policy measures to stabilize the property market and boost the overall Chinese economy. The country faces significant longer-term structural issues associated with high savings, subdued consumption, over-capacity, and dependency on export demand.
The policy moves have aided the near-term outlook and led to the rise in the Chinese benchmark index from deeply oversold levels earlier in the year. Hang Seng Index saw an increase from ~16,224 levels in mid-April to ~19,636 levels in mid-May.
Soft-landing expectations are expected to remain for the next few months as and when inflation worries decline. Since there is asymmetry over the mid-year return outlook, experts should also closely watch for signs of a deeper downturn.
With So Much Uncertainty, What Should Investors Do?
Ever since the inflation and labor market worries started taking a toll on the broader stock markets, investors have decided to flock to recession-proof and high-quality blue-chip companies. They have all the reasons for it, as these companies are capable of weathering economic volatility. The uncertainties about job growth, higher unemployment, and speculations regarding potential Federal Reserve rate cuts are some of the factors weighing over investors’ confidence.
That being said, the latest readings, ranging from inflation to jobless claims and rising retail sales, revived investors’ confidence in the US economy. Experts believe that the US economy might be heading for a “Goldilocks” scenario characterized by contained price pressures along with healthy growth. Despite fading fears, investors continue to prefer making investments in blue-chip stocks.
Even though there are several investing strategies and trends available, nothing can beat the strategy of investing in a blue-chip company that has a strong reputation.
What Are Blue-chip Stocks? An Overview
If you are hunting for some smart investments to add to your portfolio, you might have come across the term “blue-chip stocks.” These stocks are renowned for being reliable investments and they can provide numerous advantages. The blue-chip stocks are the ones having high value and potential for long-term growth.
The term, blue chip, comes from poker in which the highest-value chips are blue. Therefore, blue chip describes some of the highest-quality stocks in the market. Blue-chip stocks are from renowned and well-established companies with consistently strong performance.
More often than not, such stocks tend to have a long history of shelling out dividends and growing their market share. Even in the market downturn, blue-chip stocks remain resilient. Since well-established and renowned companies issue them, the prices of blue-chip stocks rise more slowly as compared to other stocks. Even in the downturns, these stocks are less likely to witness rapid drops. These companies have healthy balance sheets and resilient business models, because of which these are tagged as “one of the safest investments.”
How Can Blue-chip Stocks Help in Current Economic Worries?
The blue-chip stocks are sometimes synonymous with reliability and stability. Such stocks exhibit companies that are leaders in their respective industries. As a result, they boast a history of stable financials and consistent performance. They provide investors with a sense of security whenever there is an economic slowdown.
For example, iShares S&P 100 ETF, a leading bluechip ETF, saw an increase of ~20% on the YTD basis amidst uncertainty in the global markets like higher inflation, uncertain labor market, geopolitical worries, a slowdown in China, etc. In comparison, the broader market, Dow Jones Industrial Average has risen by just over ~7% on a YTD basis.
Besides size, blue-chip companies tend to remain on the front foot of innovation as they invest heavily in R&D. In stormy and difficult market conditions, dividends can offer a source of steady income. These companies possess long histories of paying generous dividends. They also have a policy of consistently increasing their payouts. Blue-chip stocks have also shown their resilience in the past, having a strong track record of weathering market downturns. For example, in 2020, when the global economy came to a standstill due to the deadly COVID-19 pandemic, the bluechip ETF delivered a return of over ~19%. On the other hand, the broader market saw an increase of just ~5%.
Pixabay/Public Domain
Our methodology
To make our list of best blue-chip stocks under $100, we started by using the Finviz screener. We looked for profitable companies with moats that are likely to last for at least the next 25 Years. We then ranked the best blue-chip stocks according to their potential upside, as of August 16.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Blue-chip Stocks Under $100
10) NIKE, Inc. (NYSE:NKE)
Share Price as of August 16, 2024: US$83.23
Average Upside Potential: 9.34%
NIKE, Inc. (NYSE:NKE) is the leading athletic footwear and apparel brand. The company designs, develops, and markets athletic apparel, footwear, equipment, and accessories across 6 major categories i.e., running, basketball, soccer, training, sportswear, and Jordan.
The investors’ sentiments about consumer companies saw an increase after healthy earnings from Walmart Inc. (NYSE:WMT) and The Home Depot, Inc. (NYSE:HD). Apart from this, with the US retail sales topping the Wall Street estimates, the worries about the strength of American consumers were eased. NIKE, Inc. (NYSE:NKE) enjoys a strong economic moat, which revolves around the concept of branding. The influential marketing campaigns, and endorsements from high-profile athletes, together with unrivaled and strong product innovation abilities should continue to make the company’s economic moat.
NIKE, Inc. (NYSE:NKE) has a strong market share, which dominates the field of professional sports. It sponsors some of the world’s best athletes and renowned legends such as Michael Jordan and Cristiano Ronaldo. The company also has a strong and well-diversified distribution and reach. The presence in large emerging markets, including India and China, continues to provide a long-term growth opportunity.
For years to come, NIKE, Inc. (NYSE:NKE)’s revenues and earnings should continue to support its stock price mainly due to strong pricing power. In 4Q 2024, its gross margin went up by 110 basis points YoY to reach 44.7%. Much of this growth came from strategic pricing actions along with reduced ocean freight rates and logistics costs.
During FY 2024, the company saw its net income rise by 12% YoY to reach $5.7 billion. It also has a strong track record of consistently increasing returns to shareholders. It has increased dividend payouts for the past 22 consecutive years. The company’s stock trades at ~26.04x its forward earnings, which is at a discount to the broader sectoral average of ~33.4x. At these levels, the company provides a strong buying opportunity for decades.
As per Insider Monkey’s 1Q 2024 database, the company was in the portfolios of 71 hedge funds, up from 69 hedge funds in the preceding quarter.
ClearBridge Investments, an investment management company, released its second quarter 2024 investor letter and mentioned NIKE, Inc. (NYSE:NKE). Here is what the fund said:
“Other moves during the quarter included sales of United Parcel Service (UPS) and NIKE, Inc. (NYSE:NKE). Nike has become overly reliant on key platforms, like Jordan, for revenue growth while innovation in areas like running has lagged. Nike could face continued revenue and profit pressure as it invests to re-invigorate innovation and re-position the business back toward wholesale outlets. As such, we are seeking out better ways to participate in the global consumer recovery in companies where earnings estimates have already reset.”
9) Walmart Inc. (NYSE:WMT)
Share Price as of August 16, 2024: US$73.45
Average Upside Potential: 10.28%
One of America’s leading retailers, Walmart Inc. (NYSE:WMT) operated more than 10,500 stores under 46 banners at fiscal 2022 end, selling a variety of general merchandise and grocery items.
Walmart Inc. (NYSE:WMT) released its strong 2Q 2025 financial results, with healthy revenue growth of 4.8% and adjusted operating income rising 7.2%. The company issued guidance for 3Q 2025 and raised its outlook for FY 2025. For 3Q 2025, it expects net sales growth of 3.25% to 4.25% and operating income to increase 3.0% to 4.5% in constant currency. For FY 2025, the giant retailer anticipates net sales growth of 3.75% – 4.75% and adjusted operating income to increase by 6.5% to 8.0% in constant currency. The company continues to gain market share, including in general merchandise, and transaction counts.
Walmart Inc. (NYSE:WMT) has a wide economic moat. The company’s advantages, which should continue to provide a competitive edge, include its cost advantage and ubiquitous brand associated with lower prices in the domestic market. The company enjoys a massive store footprint of more than ~4,600 domestic locations. The company’s ability to provide low prices is expected to provide a competitive edge for decades.
The company improved its online platform and integrated it with its physical stores. As a result, it made shopping more convenient, thereby, fuelling sales. Its focus on enhancing supply chain efficiency might help the company strengthen its brand image and support long-term growth.
Analysts at JPMorgan Chase & Co. upped their target price on shares of Walmart Inc. (NYSE:WMT) from $81.00 to $83.00. They gave an “Overweight” rating on 16th August. Notably, 3 analysts have rated the shares of Walmart Inc. (NYSE:WMT) with a “Hold” rating, 26 analysts have issued a “Buy” rating and 1 analyst gave a “Strong Buy” rating.
8) The Charles Schwab Corporation (NYSE:SCHW)
Share Price as of August 16, 2024: US$65.55
Average Upside Potential: 11.37%
The Charles Schwab Corporation (NYSE:SCHW) carries out operations in brokerage, banking, and asset-management businesses. It operates a large network of brick-and-mortar brokerage branch offices, a well-established online investing website, and has mobile trading capabilities.
One of the critical parts of its efficient business model is the company’s deposits. Such deposits have served as the low-cost funding base, which is critical for success. That being said, rapid increases in rates have impacted the company’s business. Higher rates prompted clients to shift their deposits from lower-yielding accounts to higher-yielding alternatives. These alternatives include high-yield savings or money market funds. From August 2022 to March 2023, The Charles Schwab Corporation (NYSE:SCHW) lost over ~$45 billion in deposits. This means, on average, it lost ~$5.6 billion per month.
However, as of now, deposit outflows have slowed, and the expectations of interest rate cuts should act as a tailwind for The Charles Schwab Corporation (NYSE:SCHW).
The company enjoys a wide economic moat. Given its massive scale and industry-leading cost efficiency, The Charles Schwab Corporation (NYSE:SCHW) has the potential to steer through severe competitive pressures and earn above its cost of capital. Its low costs and large client base should offer flexibility to develop products. Its new online advisory platform is expected to benefit from low cost and higher client reach. This will help the leading broker to be more profitable as compared to existing players.
The company’s competitive advantage is enabled through shared economies of scale, whereby, Schwab reduces its costs to the customer, and attracts new assets. This enables the company to lower even more costs to the customer. Analysts at Jefferies Financial Group increased their price target on shares of the company from $85.00 to $88.00. They gave a “Buy” rating on 8thJuly.
Fiduciary Management Inc. (FMI), an independent money management firm, released its first quarter 2024 investor letter. Here is what the fund said about The Charles Schwab Corporation (NYSE:SCHW):
“We last wrote about The Charles Schwab Corporation (NYSE:SCHW) a year ago in the midst of the banking crisis. At the time, the worst fears were a bank run and/ or balance sheet impairment. Positively, these did not come to pass. As a refresh of our interest in the business, Charles Schwab is a leading discount broker. The business benefits from long run market appreciation and Schwab’s better mousetrap has allowed it to gain share on top of market growth, which has driven long run revenue growth of 10%. The competitive advantage comes from shared economies of scale, whereby Schwab lowers costs to the customer, thereby attracting new assets which then lets them lower costs even more to the customer. The rapid rise in interest rates that precipitated the banking crisis contributed to a challenging last 18 months for Schwab, as clients moved bank cash to higher yielding instruments. This led to a significant, albeit short-term, earnings headwind. As we move into 2024, we believe the worst is behind them. We expect Schwab will experience strong earnings growth for the next few years, driven by accelerating revenue growth and renewed expense discipline. Despite this attractive outlook, Schwab trades for 21 times trough earnings and only 14 times our estimate of normalized earnings.”
7) Boston Scientific Corporation (NYSE:BSX)
Share Price as of August 16, 2024: US$78.25
Average Upside Potential: 12.46%
Boston Scientific Corporation (NYSE:BSX) produces products for use in angioplasty, blood clot filtration, cardiac rhythm management, catheter-directed ultrasound imaging, structural heart disease, interventional oncology, and treatment of incontinence.
The company’s growth prospects stem from the differentiated products in electrophysiology and structural heart devices. More importantly, Wall Street analysts are more optimistic about the emerging field of PFA, an area where it is well-placed. Earlier, doctors have used temperature-based methods to disable heart tissue, which is responsible for fluctuating heartbeats.
The problem with temperature-based methods includes the probability of damaging the surrounding tissue. On the other hand, PFA is dependent on electricity to disable aberrant tissue. Since different tissues have different electrical thresholds, this procedure can help in selectively sparing the surrounding tissue. In 2Q 2024, Boston Scientific Corporation (NYSE:BSX) saw net sales of $4.120 billion, exhibiting an increase of 14.5% YoY on a reported basis, and ~16.1% YoY on an operational basis. Its GAAP net income was $324 million or $0.22 per share (EPS) as compared to $261 million or $0.18 per share in the year-ago period.
Boston Scientific Corporation (NYSE:BSX) has a wide economic moat, given its strong brand reputation, well-established and stable customer relationships, and prominent global presence. Apart from these competitive advantages, the company’s strategic focus on critical growth areas, like minimally invasive procedures and emerging markets, should continue to offer opportunities for continued expansion and differentiation.
Also, the company deploys a proactive strategy to tackle challenges related to intense industry competition, regulatory setbacks, and technological innovations. The strategy includes investment in R&D to maintain a healthy and demand-oriented pipeline of innovative products, and strategic acquisitions to further its product portfolio and capabilities. It has recently announced an agreement to acquire Silk Road Medical, Inc (SILK), which commercialized a platform of products to prevent stroke in patients having carotid artery disease.
Morgan Stanley upped its price target on shares of Boston Scientific Corporation (NYSE:BSX) from $79.00 to $92.00. The brokerage gave an “Overweight” rating on 15th July. As per Insider Monkey’s 1Q 2024 data, 72 hedge funds reported holding stakes in Boston Scientific Corporation (NYSE:BSX).
Baron Funds, an investment management company, released a second-quarter 2024 investor letter. Here is what the fund said about Boston Scientific Corporation (NYSE:BSX):
“Boston Scientific Corporation (NYSE:BSX) is a global manufacturer of medical devices used in a broad range of interventional medical specialties. Shares increased during the quarter. We believe Boston Scientific can grow sustainably in the high single digits, driven by differentiated products in electrophysiology and structural heart devices. In particular, there has been increasing excitement around the emerging field of PFA, where the company is well positioned. Traditionally, physicians have used temperature-based methods to disable heart tissue responsible for irregular heartbeats. Temperature-based methods may damage surrounding tissue, while PFA relies on electricity to damage aberrant tissue, and because different types of tissue have different electrical thresholds, the surrounding tissue can be selectively spared. Coupled with cost discipline and more than 50 basis points of annual operating margin expansion, we believe Boston Scientific’s double-digit EPS growth profile makes it a compelling name within the medical device universe.”
6) TotalEnergies SE (NYSE:TTE)
Share Price as of August 16, 2024: US$68.65
Average Upside Potential: 15.08%
TotalEnergies SE (NYSE:TTE) is an integrated oil and gas company, that explores for, produces, and refines oil around the world.
To address the challenges related to the energy transition, TotalEnergies SE (NYSE:TTE) implemented a two-pillar strategy. Firstly, it continues to establish low-cost exploration and production projects, and LNG will play an important role in the transition. Secondly, the company is building an Integrated Power segment with the help of investments in renewable power. Therefore, the company plans to invest more than 30% of its total spending in low-carbon businesses.
The company has a wide economic moat, whereby, it enjoys a low-cost and geographically well-diversified portfolio of upstream assets. Apart from this, the company’s diversified business mix offers balance during periods of hydrocarbon price volatility.
The company’s competitive advantage includes its increased FCF and ROIC. This is because traditional exploration and production assets are being used to finance short-cycle projects. TotalEnergies SE (NYSE:TTE) is focused on divesting its non-core assets as it focuses on advantaged, low-cost, and low-emission projects. This is supported by the fact that it signed a deal to divest its ~10% interest in the major oil and gas player in Nigeria to the locally owned company for $860 million.
In another development, TotalEnergies SE (NYSE:TTE) entered into a definitive agreement to sell its wholly owned subsidiary, TotalEnergies EP (Brunei) B.V., to Malaysia’s Hibiscus Petroleum Berhad for the value of $259 million.
Analysts at Wolfe Research initiated a coverage on the shares of TotalEnergies SE (NYSE:TTE) on 18th July 2024. They gave an “Outperform” rating, with a price target of $87.00 per share.
According to Insider Monkey, the number of hedge funds holding stakes in the company increased to 18 in Q1 2024 from 17 in the preceding quarter. Aristotle Capital Management, LLC, an investment management company, released its first quarter 2024 investor letter and mentioned TotalEnergies SE (NYSE:TTE). Here is what the fund said:
“During the quarter, we sold our positions in Phillips 66 and Sysco and invested in two new positions: Lowe’s Companies and TotalEnergies SE (NYSE:TTE).
Headquartered in Paris, France, TotalEnergies was founded in 1924 and is one of the world’s largest energy companies. The company operates in more than 130 countries and spans the entire energy value chain, producing and marketing oil and biofuels, liquid natural gas (LNG), renewables and electricity.
To meet the challenge of the energy transition and still ensure reliable energy in the short term, TotalEnergies has implemented a two-pillar strategy: on one end, the company continues to develop low-cost exploration and production projects, with LNG playing a vital role in the transition; on the other, it has been building its Integrated Power segment through investments in renewable power. As such, management plans to invest over 30% of total spending in low-carbon businesses and rank among the world’s top five providers of solar and wind energy by 2030. To emphasize this ambition, the company changed its name from Total to TotalEnergies in 2021…” (Click here to read the full text)
5) Shell plc (NYSE:SHEL)
Share Price as of August 16, 2024: US$72.68
Average Upside Potential: 16.95%
Shell plc (NYSE:SHEL) is in the business of exploring and refining petroleum products. It produces and imports fuels, chemicals, and lubricants, and operates service station networks.
With the company’s focus on high-margin projects and renewable energy solutions together with significant bargaining power because of its market-controlling position, Shell plc (NYSE:SHEL) has an economic moat. The company has invested in the development of technology for exploration purposes. Thanks to geophysical data, Shell plc (NYSE:SHEL) developed its methods for oil and gas exploration. Apart from these, the company’s merger with BG Group has provided it with a significant competitive advantage. The merger gave it a stronghold in offshore of Brazil and Australia. As a result, it is in a better position as these countries have rich oil and gas resources.
The company expects to add ~500,000 barrels of oil equivalent per day by 2025 with the help of several growth projects. Shell plc (NYSE:SHEL) has planned investments ranging between $10 billion – $15 billion in low-carbon initiatives between 2023 and 2025. The company is bullish on the LNG market and demonstrated stable performance in marketing and liquids trading.
It has strengthened its leading LNG portfolio and made healthy progress across its Capital Markets Day 2023 financial targets, which include $1.7 billion of structural cost reductions since 2022.
TD Securities increased its price target on shares of Shell plc (NYSE:SHEL) from $74.00 to $81.00 and gave a “Buy” rating on 3rd May. A total of 50 hedge funds out of the 920 tracked by Insider Monkey held stakes in Shell plc (NYSE:SHEL) as of the end of the first quarter.
4) Wells Fargo & Company (NYSE:WFC)
Share Price as of August 16, 2024: US$55.33
Average Upside Potential: 17.48%
Wells Fargo & Company (NYSE:WFC) is one of the leading banks in the United States, which is split into 4 segments. These include consumer banking, commercial banking, corporate and investment banking, and wealth and investment management.
Wells Fargo & Company (NYSE:WFC)’s wide economic moat stems from the cost advantages and customer switching costs in the core banking operations, and intangible assets in wealth management. Its funding costs continue to act as a key source of advantage. It attempts to increase switching costs by deepening relationships through multiple products and by offering acceptable customer service.
Out of its tangible assets, ~20% are financed by deposits that have no interest expense. It also has a strong and dense branch network, enabling the lender to maintain the top share in one-third of its markets. The company increased its deposit market share to ~10% or more in 21 states. Apart from these advantages, the focus on cross-selling allows it to build tight relationships with customers rather than one-off transactions. Apart from producing sticky deposits, this practice leads to more productive assets.
The investments it has been making allowed it to take advantage of the market activity during 2Q 2024, with healthy performance in investment advisory, trading, and investment banking fees. Wells Fargo & Company (NYSE:WFC) is expected to see improvement in its net interest income once the US Fed starts cutting interest rates. The bank should see some improvement in the loan demand.
The much-anticipated Fed rate cuts should help Wells Fargo & Company (NYSE:WFC) in reducing their deposit costs while minimizing the risk of credit losses. According to Insider Monkey, 73 hedge funds out of 920 tracked held stakes in Wells Fargo & Company (NYSE:WFC) as of the end of Q1 2024.
ClearBridge Investments, an investment management company, released its fourth quarter 2023 investor letter and mentioned Wells Fargo & Company (NYSE:WFC). Here is what the fund said:
“Stock selection in the financials sector proved to be the largest contributor to relative outperformance. Banking stocks such as Wells Fargo & Company (NYSE:WFC) saw their share price rise during the quarter as investors anticipated Fed rate cuts that would reduce deposit costs while retaining economic strength and minimizing the risk of credit losses.”
3) Citigroup, Inc. (NYSE:C)
Share Price as of August 16, 2024: US$61.40
Average Upside Potential: 18.89%
Citigroup, Inc. (NYSE:C) is a global financial services company, with operations organized into 2 primary segments: the global consumer banking segment and the institutional clients group.
The banking company has a wide economic moat. Its Services business should continue to act as a strong asset, with a healthy share in high-margin treasury services. This business handles more than $5 trillion in payments a day, and the leading lender benefits from having banking licenses globally. This enables Citigroup, Inc. (NYSE:C) to offer payment and other services to Fortune 500 clients. The bank has a healthy overall leverage to volume growth as a result of global payments and investment activity.
Its treasury and trade Solutions (TTS) and securities services business are tailored to address the complex needs of multinational corporations, and public sector organizations. Citigroup, Inc. (NYSE:C)’s restructuring efforts continue, which are tackling regulatory challenges and building capital in expectation of higher requirements. Experts believe that the banking company should see a significant decline in expenses for the remainder of 2024.
Analysts at Oppenheimer upped their price target on shares of Citigroup, Inc. (NYSE:C) from $85.00 to $86.00, giving an “Outperform” rating on 15th July. As of the end of the first quarter, 94 out of 920 hedge funds tracked by the Insider Monkey database were long Citigroup, Inc. (NYSE:C).
Diamond Hill Capital, an investment management company, released its first-quarter 2024 investor letter. Here is what the fund said:
“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”
2) Sony Group Corporation (NYSE:SONY)
Share Price as of August 16, 2024: US$90.24
Average Upside Potential: 21.16%
Sony Group Corporation (NYSE:SONY) is a conglomerate that has consumer electronics roots. The company not only designs, develops, produces, and sells electronic equipment and devices, but is engaged in content businesses, like console and mobile games, music, and movies.
The company’s long-running diversification strategy in content seems to yield healthy results amid shifting technology and consumer habits. Sony Group Corporation (NYSE:SONY) enjoys a wide economic moat of an asset-light business model and focus on content acquisition. The company’s significant investments in Sony Music and PlayStation and related game operations should continue to provide a competitive edge.
The company’s current business portfolio seems to be much stronger than before and should be able to generate ROIC above its weighted average cost of capital in the long term. It implemented a business model transformation in consumer electronics. This made the company less vulnerable to economic fluctuations. Sony Group Corporation (NYSE:SONY) restructured and reorganized production facilities for TVs and smartphones, and made some divestments of PCs.
Over the past several years, Sony Group Corporation (NYSE:SONY) acquired several content-creation companies throughout games, music, and film/TV. The company continues to see the benefits of digital distribution which are providing it with more durable revenue streams.
Insider Monkey’s 1Q 2024 database, tracking 920 elite hedge funds, revealed that the number of hedge funds investing in Sony Group Corporation (NYSE:SONY) was 24. On average, 2 analysts gave the stock a “Hold” rating, and 3 have assigned a “Buy” rating.
1) The Walt Disney Company (NYSE:DIS)
Share Price as of August 16, 2024: US$89.30
Average Upside Potential: 25.98%
The Walt Disney Company (NYSE:DIS) is an entertainment and media enterprise company. The company carries out operations through segments such as media networks, parks and resorts, studio entertainment, consumer products, and interactive media.
The Walt Disney Company (NYSE:DIS) possesses a well-defined economic moat. The company owns brands like Marvel, ESPN, Lucasfilm, and Pixar. Collectively, all these brands form a composite group of dominating market characters. Therefore, the company’s ownership of timeless characters and franchises together with its ability to create top-tier content should continue to give it a leg up.
A downturn might temporarily impact the revenues from movies or theme parks, but it should be for the short term. In the long term, given its share and market-leading characters, consumers will return to its movies, parks, and merchandise.
In 3Q 2024, the company’s revenue came in at $23.2 billion, reflecting an increase of 4% YoY. This was mainly because of 2% growth in the Experiences segment and 4% growth in the Entertainment division. Its Adjusted earnings per share went up by ~35%.
The Walt Disney Company (NYSE:DIS)’s long-term prospects appear to be even more promising given its improved streaming segment results. The subscriber growth and higher monthly subscription costs for DTC services supported the company’s streaming segment to post a quarterly operating profit as compared to the prior-year period. Its entertainment business posted operating income of $1.20 billion in 3Q 2024.
In the coming years, the company will make significant investments in the United Kingdom and continental Europe. These investments will focus on producing movies and television shows for the big screen and its streaming platform, Disney+.
The Goldman Sachs Group assumed coverage on shares of The Walt Disney Company (NYSE:DIS) on 25th June. They gave a “Buy” rating and a $125.00 price objective.
Diamond Hill Capital, an investment management company, released its “Long-Short Fund” first-quarter 2024 investor letter. Here is what the fund said:
“Other top Q1 contributors included Meta Platforms, Citigroup and The Walt Disney Company (NYSE:DIS). Media and entertainment company Walt Disney faced — and defeated — an activist campaign and proxy battle during the quarter, giving a boost to shares. Profitability has also improved — with the company announcing it expects to reach double-digits profitability in its streaming business — and it announced forthcoming capital returns to shareholders.”
While we acknowledge the potential of DIS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
