Blue chip stocks have long been considered the gold standard of investments, offering a combination of steady growth, consistent dividends, and a reputation for weathering economic downturns.
The term “blue chip” originated from poker, where blue chips were the highest denomination of chips used in the game. In the early 20th century, the term was adopted by financial analysts to describe the stocks of large, well-established companies with a proven track record of success. These companies were considered to be the best of the best. Today, blue chip stocks are typically defined as the stocks of large, well-established companies that have a large market capitalization. These companies are usually industry leaders, with a strong brand, a diverse product or service offering, and a history of consistent profitability. Blue chip stocks offer a relatively low level of risk, particularly when compared to smaller, more volatile stocks. This makes them an attractive option for conservative investors, who are looking to preserve their capital and generate steady returns.
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In an interview with Yahoo Finance on December 21, David Wagner, Portfolio Manager at Aptus Capital Advisors, provided a detailed analysis of the current market dynamics and his investment strategy. One of the key points Wagner made was his preference for large-cap stocks over small-cap stocks. This stance was particularly noteworthy given his extensive experience in small-cap investing and running a small-cap strategy for over a decade. Wagner explained that while small caps were not all equal, many passive small-cap investments include a significant portion of unprofitable companies. He cited data showing that passive small-cap investors often had 40% of their assets invested in companies that lacked profitability, which could be a significant risk in a volatile market.
In contrast, large-cap stocks, particularly those in the S&P 500 have a strong operating leverage. Wagner noted that the S&P 500 is projected to see earnings per share (EPS) growth of 15% in the following year, driven by revenue growth of only 5%. This operating leverage, he argued, was a unique characteristic of large-cap stocks and provided a compelling reason to favor them over small-caps. He explained that operating leverage amplifies the impact of revenue growth on earnings, which can lead to more significant returns for investors.
Wagner also highlighted the evolving nature of the S&P 500. He noted that large-cap stocks were increasingly benefiting from operational efficiencies and economies of scale, which were not as prevalent in small-cap or international markets. Small-cap stocks, he observed, were more service-oriented and often lacked the robust profit margins and revenue diversification seen in large-cap companies.
Wagner further emphasized that while operating leverage could work both ways, potentially leading to more pronounced negative returns in a downturn, it was currently working in favor of large-cap stocks. He forecasted that the market would see more “tailed” returns, meaning that the best-performing large-cap stocks would outperform more significantly, while the worst-performing ones would underperform more severely. This dynamic, he argued, made large-cap stocks an attractive investment option.
Blue chip stocks continue to be a cornerstone of a well-diversified investment portfolio, offering stability, steady growth, and resilience in uncertain economic conditions. Therefore, the case for investing in these stocks remains compelling. With that in context, let’s take a look at the 12 best blue chip stocks to buy under $100.
A trader at a stock exchange terminal, analyzing the daily data of a large-mid capitalization company.
Our Methodology
To compile our list of the 12 best blue chip stocks to buy under $100, we used blue chip ETFs plus online rankings to compile a list of 25 companies. We then used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
12 Best Blue Chip Stocks to Buy Under $100
12. Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Holdings: 61
Stock Price as of January 24: $87.97
Novo Nordisk A/S (NYSE:NVO) is a leading global pharmaceutical company known for its diabetes care products, including insulin and GLP-1 receptor agonists. The company also develops treatments for obesity, growth disorders, and hemophilia. Novo Nordisk A/S’s (NYSE:NVO) dominance in diabetes care and strong financial performance have cemented its reputation as a blue-chip stock in the healthcare industry.
Novo Nordisk A/S’s (NYSE:NVO) GLP-1 treatments, including Ozempic and Wegovy, have experienced significant sales growth due to their proven effectiveness in regulating blood glucose levels and supporting weight loss. To build on this momentum, Novo Nordisk A/S (NYSE:NVO) is making substantial investments in expanding its supply chain to accommodate rising demand. Over the past three years, the company has tripled its patient reach, now serving more than 11.5 million people worldwide. Additionally, Novo Nordisk A/S (NYSE:NVO) is broadening its GLP-1 portfolio with new formulations and indications, such as oral semaglutide and the 2.4 mg dose for obesity, to address unmet medical needs and serve a wider patient population.
Novo Nordisk A/S (NYSE:NVO) is also focused on enhancing market access and patient support. In the U.S., the company has secured insurance coverage for Wegovy for over 55 million individuals living with obesity. Globally, Novo Nordisk A/S (NYSE:NVO) plans to launch Wegovy in more than 15 countries and is working to restore supply for its treatments targeting rare endocrine disorders. Additionally, the company is investing in patient education and support initiatives to empower individuals in effectively managing their conditions.
11. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holdings: 69
Stock Price as of January 24: $61.92
The Coca-Cola Company (NYSE:KO) is an iconic beverage leader, known for its flagship Coca-Cola drink and an extensive portfolio of sparkling and still beverages. The company caters to consumers, restaurants, and retailers in over 200 countries. The Coca-Cola Company’s (NYSE:KO) strong brand equity, diversified offerings, and consistent dividends make it a cornerstone investment for stability and income-focused portfolios.
The Coca-Cola Company (NYSE:KO) is pursuing a balanced growth strategy that combines both volume and pricing. Despite a moderation in consumer inflation and pricing, the company remains focused on achieving its long-term organic sales growth target of 4% to 6%. This approach is supported by the company’s strong market leadership and the significant growth potential of the beverage industry, especially in developing and emerging markets.
The Coca-Cola Company has also set ambitious goals in key areas such as water stewardship, packaging, and climate action. The company aims to become water-positive by returning more water to the environment than it consumes to support societal benefits and ensure long-term business viability. Additionally, the company is committed to reducing its carbon footprint through renewable energy use and sustainable packaging solutions. These initiatives not only strengthen the company’s reputation but also reinforce its role as a responsible corporate citizen.
The Coca-Cola Company (NYSE:KO) has a proven track record of successful mergers and acquisitions (M&A), particularly in bolt-on M&A, where smaller brands are acquired and scaled. This strategy is expected to continue, with a focus on integrating and growing smaller acquisitions. Simultaneously, the company is investing in organic growth through innovation, digital transformation, and strategic partnerships.
10. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holdings: 69
Stock Price as of January 24: $72.83
NextEra Energy, Inc. (NYSE:NEE) is a leading American energy company that has been at the forefront of the energy industry for decades. The company is a leader in operating one of the largest wind and solar energy assets in the United States. NextEra Energy, Inc. (NYSE:NEE) also provides utility services through its subsidiary, Florida Power & Light.
NextEra Energy, Inc. (NYSE:NEE) has recently announced a framework agreement with GE Vernova, a leading provider of gas power technology, to jointly develop new gas-fired generation projects. This partnership will enable the company to leverage GE Vernova’s expertise in gas turbine technology, while also utilizing its extensive experience in developing and operating large-scale energy projects.
In addition to its partnership with GE Vernova, NextEra Energy, Inc. (NYSE:NEE) is investing heavily in renewable energy, with a particular focus on wind and solar power. The company has set ambitious targets for the development of new renewable energy projects, with a goal of adding over 25 gigawatts of new capacity to its portfolio in the coming years. To achieve this goal, NextEra Energy, Inc. (NYSE:NEE) is exploring new technologies and innovations, such as energy storage and grid modernization, which will enable the efficient integration of renewable energy sources into the grid.
Furthermore, NextEra Energy, Inc. (NYSE:NEE) is exploring new opportunities for growth through the development of small modular reactors (SMRs) and the potential recommissioning of its Duane Arnold nuclear plant in Iowa. The company believes that SMR technology has the potential to play a significant role in the future of nuclear power.
9. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holdings: 70
Stock Price as of January 24: $59.67
Bristol-Myers Squibb Company (NYSE:BMY) is a biopharmaceutical giant focused on innovative therapies for oncology, cardiovascular, and immunological conditions. The company’s portfolio includes key drugs such as Opdivo and Eliquis, which drive significant revenue growth. Bristol-Myers Squibb Company’s (NYSE:BMY) partnerships with healthcare providers, its global presence, and its commitment to R&D make it a trusted name in the pharmaceutical industry.
Bristol-Myers Squibb Company (NYSE:BMY) is strategically advancing its pipeline by focusing on transformational medicines in areas where it holds a competitive advantage. This includes enhancing its oncology portfolio through acquisitions such as RayzeBio, which grants access to radiopharmaceuticals and is one of the fastest-growing platforms in solid tumor oncology. In immunology, the company is pursuing groundbreaking treatments designed to reset the immune system, exemplified by its CD19 NEX-T program for autoimmune diseases.
Additionally, Bristol-Myers Squibb Company (NYSE:BMY) is leveraging technology and artificial intelligence (AI) to accelerate innovation and improve the success rate of its research and development efforts. The company is using AI to enhance drug discovery, optimize clinical trial design, and improve operational efficiency. By incorporating advanced technologies, the company aims to bring new medicines to market more quickly and efficiently, driving sustainable growth and delivering value to patients and shareholders alike.
8. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holdings: 72
Stock Price as of January 24: $77.32
Wells Fargo & Company (NYSE:WFC) is one of the largest banking institutions in the United States. The banks offer a diverse range of businesses, including consumer and commercial banking, corporate and investment banking, and wealth management.
Wells Fargo & Company (NYSE:WFC) is focusing on expanding its investment banking and capital markets businesses, which offer a range of products and services to corporate and institutional clients. The company has been hiring experienced professionals to enhance its capabilities in these areas. Furthermore, Wells Fargo & Company (NYSE:WFC) is also focused on growing its credit card business, which is expected to become a significant contributor to the company’s profitability in the future. The bank aims to offer more competitive products and pricing, which is expected to drive growth in the business.
Wells Fargo & Company (NYSE:WFC) is investing heavily in technology and digital transformation. The company is focused on enhancing the customer experience through digital channels, including online and mobile banking, and is also investing in new technologies such as artificial intelligence and blockchain. With a strong technology platform, Wells Fargo & Company (NYSE:WFC) aims to offer more personalized and convenient services to its customers, which will help to drive growth and increase customer loyalty. Wells Fargo & Company (NYSE:WFC) is also using technology to improve its operational efficiency and reduce costs, which will help to support its profitability goals.
7. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holdings: 74
Stock Price as of January 24: $81.83
The Charles Schwab Corporation (NYSE:SCHW) is a provider of investment services, offering trading, wealth management, and advisory solutions. The company’s clients range from individual investors to institutions, with a focus on low-cost and innovative financial products. The Charles Schwab Corporation’s (NYSE:SCHW) strong brand reputation and consistent growth in client assets highlight its market leadership and make it a reliable investment in the financial services sector.
The Charles Schwab Corporation (NYSE:SCHW) is driving growth through organic expansion, strategic investments, and technological innovation. A key initiative is the development of new products and services tailored to the evolving needs of its clients. The company is making significant investments in its alternative investments platform, designed to provide high-net-worth and ultra-high-net-worth clients with access to alternative asset classes such as private equity, private credit, and hedge funds. This strategy aims to strengthen relationships with its most valuable clients and attract new business from investors seeking diversified portfolios.
Additionally, The Charles Schwab Corporation (NYSE:SCHW) is evaluating the potential to offer spot cryptocurrency trading, contingent on regulatory developments. This initiative would position the company to meet the growing demand for cryptocurrency investments, expanding its range of offerings for clients. The company is also enhancing its digital capabilities, including the introduction of advanced mobile apps and online platforms, to streamline investment management and improve access to its services.
6. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holdings: 75
Stock Price as of January 24: $73.57
NIKE, Inc. (NYSE:NKE) is a globally recognized sportswear and footwear leader that designs innovative products for athletes and casual wearers alike. The company is known for its strong brand presence, direct-to-consumer sales, and sponsorship deals with top athletes and sports teams. NIKE, Inc. (NYSE:NKE) is a blue-chip stock valued for its consistent growth and brand equity.
NIKE, Inc. (NYSE:NKE) is reinvesting in its brand to inspire and emotionally connect with consumers during significant sports moments and product launches. The company has introduced marketing campaigns like “Winning Isn’t Comfortable” and forged long-term partnerships with major sports organizations and leagues, including the NBA, WNBA, NFL, and Brazil Football Confederation. These collaborations aim to increase brand visibility and highlight NIKE’s innovative products and athlete stories, fostering consumer interest and loyalty.
In addition, NIKE, Inc. (NYSE:NKE) is focused on rebuilding trust with its key wholesale partners that were affected by recent business decisions. Furthermore, the company is committed to delivering innovative products, sharing compelling brand stories, and fostering mutually profitable growth. This includes providing partners with access to the latest innovations, marketing support, and strategic collaboration to drive successful sell-through and maintain a healthy, vibrant marketplace.
5. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holdings: 76
Stock Price as of January 24: $98.81
Starbucks Corporation (NASDAQ:SBUX) is a multinational coffeehouse chain and a leader in the coffee and specialty beverage industry. Operating more than 32,000 stores worldwide, the company offers premium coffee, tea, snack products, and consumer-packaged goods, including coffee beans and ready-to-drink beverages.
Starbucks Corporation (NASDAQ:SBUX) has launched its “Back to Starbucks” initiative to refocus on its core identity as a community coffeehouse. As part of this strategy, the company is making significant changes to enhance the in-store experience. Starbucks Corporation (NASDAQ:SBUX) is reintroducing coffee condiment bars and ceramic mugs for in-store use, which aims to improve the customer experience while accelerating service. Additionally, the company is deploying Clover Vertica brewers across all company-operated locations to deliver high-quality, on-demand brewed coffee.
To simplify its offerings, Starbucks Corporation (NASDAQ:SBUX) is revising its menu and customization options. The company is eliminating the upcharge for non-dairy milk and is reducing costs for nearly half of its customers who currently pay for modifiers. This change is part of a broader effort to create a more straightforward and logical pricing structure. By reducing complexity, Starbucks Corporation (NASDAQ:SBUX) aims to improve the customer experience, making ordering and enjoying beverages more convenient. The company is also streamlining its menu to focus on fewer, higher-quality offerings to ensure consistency across its product lineup.
4. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holdings: 86
Stock Price as of January 24: $95.55
Merck & Co., Inc. (NYSE:MRK) is a leading global pharmaceutical company committed to discovering, developing, and delivering innovative medicines and vaccines to improve human and animal health. The company is known for its medical advancements and its capability to address some of the world’s most pressing health challenges.
Merck & Co., Inc. (NYSE:MRK) is advancing the development of enlicitide, an oral PCSK9 inhibitor positioned as the most potent oral LDL-lowering medicine. This drug is designed to offer a cost-effective oral solution, enlicitide targets the significant unmet need for LDL-lowering therapies. In the obesity market, the company is focusing on specific at-risk subpopulations, including those with MASH who require substantial weight loss. Additionally, Merck & Co., Inc. (NYSE:MRK) is developing efinopegdutide, an oral GLP-1 therapy currently in Phase II trials. These efforts are part of a broader strategy to address critical unmet needs with innovative and cost-effective patient solutions.
Merck & Co., Inc. (NYSE:MRK) has significantly expanded its late-stage development pipeline, increasing the number of assets from 9 in 2021 to 26 in 2024. This growth focuses on oncology, cardiometabolic diseases, immunology, vaccines, and ophthalmology. The company has also invested heavily in business development, allocating nearly $40 billion over the past 3.5 years to acquire new assets. A notable example is the acquisition of EyeBio, which introduces a new mechanism of action for treating wet AMD and diabetic macular edema, which addresses a critical area of unmet need.
3. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holdings: 88
Stock Price as of January 24: $94.76
Walmart Inc. (NYSE:WMT) is one of the world’s largest retailers with a vast network of stores and an expanding e-commerce platform. The company offers groceries, apparel, and general merchandise at competitive prices. Walmart Inc.’s (NYSE:WMT) strong brand, supply chain efficiency, and focus on digital transformation contribute to its status as a reliable blue-chip investment.
Walmart Inc. (NYSE:WMT) is aggressively expanding its e-commerce business, with a focus on creating a convenient and personalized shopping experience for its customers. The company has seen significant growth in its online sales and is leveraging its vast network of stores to offer fast and reliable delivery options, including same-day and next-day delivery, to meet the evolving expectations of its customers.
Walmart Inc. (NYSE:WMT) is also investing in emerging technologies, such as automation and artificial intelligence, to enhance its operations and improve the customer experience. The company is rolling out automation technologies in its fulfillment centers, which has resulted in significant improvements in efficiency and productivity. Walmart Inc. (NYSE:WMT) is also using data analytics and machine learning to better understand its customers’ shopping behaviors and preferences, allowing the company to offer more personalized recommendations and promotions.
2. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holdings: 88
Stock Price as of January 24: $81.48
Citigroup Inc. (NYSE:C) is a multinational investment bank and financial services corporation headquartered in New York City. The bank has established itself as one of the largest and most recognized financial institutions in the world and provides a wide range of financial products and services, including consumer banking, corporate banking, investment banking, and wealth management, to individual, corporate, and institutional clients.
Citigroup Inc. (NYSE:C) is taking significant steps to grow its business in the future, with a focus on improving its return on tangible common equity (RoTCE) and increasing its operating efficiency. The company has set a medium-term target of achieving a RoTCE of 10% to 11% by 2026, with a long-term goal of exceeding this target. To achieve this, Citigroup Inc. (NYSE:C) is investing in its technology and transformation initiatives, which are expected to drive growth and improve productivity. The company is also focused on expanding its wealth management business, with a goal of becoming a global leader in this area. By leveraging its existing client relationships and investing in new technologies and talent, Citigroup Inc. (NYSE:C) aims to drive significant growth in this business and improve its overall returns.
In addition to its wealth management business, Citigroup Inc. (NYSE:C) is also focused on growing its U.S. Personal Banking business. The company is investing in new products and services, such as its co-brand credit cards and proprietary credit cards, and is working to improve its customer experience and increase customer engagement.
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holdings: 115
Stock Price as of January 24: $89.14
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese multinational technology company specializing in e-commerce, cloud computing, and digital entertainment. The company operates prominent platforms such as Taobao, Tmall, Alibaba Cloud, and Alibaba International Digital Commerce (AIDC). Alibaba Group Holding Limited (NYSE:BABA) generates revenue from marketplace commissions, advertising, cloud services, and digital media.
Alibaba Group Holding Limited (NYSE:BABA) is prioritizing enhancements to the user experience on its platforms, particularly Taobao and Tmall. The company aims to boost purchase frequency and customer loyalty through initiatives such as the 88VIP Club loyalty program. Additionally, Alibaba Group Holding Limited (NYSE:BABA) is investing heavily in advanced technology and AI infrastructure to provide reliable and cost-effective AI-driven solutions across industries. The company has introduced industry-standard software service fees and expanded the use of Quanzhantui, its AI-powered marketing tool, to help merchants improve marketing efficiency.
Moreover, Alibaba Group Holding Limited (NYSE:BABA) is focused on improving the operational efficiency of its unprofitable segments, including local services and digital media and entertainment. The company is also enhancing collaboration among its business units, particularly in global logistics, to build a more integrated and streamlined ecosystem.
While we acknowledge the potential of Alibaba Group Holding Limited (NYSE:BABA) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
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