13 Best Blue Chip Stocks Under $100

Published on October 14, 2023 at 12:47 pm by Fahad Saleem in Hedge Funds, News

In this article, we will take a look at the 13 best blue chip stocks under $100. To see more such companies, go directly to 5 Best Blue Chip Stocks Under $100.

Global markets have started to see the real effects of rising interest rates. Consumer spending is expected to decline in the coming weeks and months as inflation remains elevated, mainly due to a sharp rise in energy prices. According to an October report from Merrill, which quotes, EIA’s data, Brent oil in the fourth quarter of 2023 is expected to average at around $93 per barrel.

Merrill also said that the era of easy money might be over and the coming days and weeks will show how companies and individuals deal with this reality. The report said:

“Borrowers (both public and private) will need to deal with the repercussions of almost 15 years of near-zero interest rate policies, which drove a significant increase in aggregate debt levels across public and private markets. This has several important implications, particularly for lower-quality, high-yield and loan issuers, where debt-service burdens are higher relative to earnings, and defaults are already on the rise. For Investment-grade (IG) investors, the answer is more nuanced. While debt growth in the IG corporate market has led to a notable deterioration in credit quality over time, this is a well understood trend, and we expect that most IG issuers will face just minor challenges should rates indeed stay higher for longer. Furthermore, in the longer term, higher debt costs could lead to more conservatism on behalf of management teams with regard to balance sheet leverage and management. A bigger potential longer-term worry, however, could be growing U.S. government debt as issuance needs remain elevated given rising deficits. This is a key risk factor that we see supporting the higher-for-longer view on yields and will be something to watch closely over the next several quarters.”

Some analysts were expecting the Fed to start rate cuts in 2024 but the latest jobs report might have dampened those hopes. RBC Wealth Management in a September report had said that the Federal Reserve could start to cut rates if weak economic data comes especially on the employment front. That hope was crushed on October 6 when the latest report showed US labor market remains strong. The RBC report however said that 2024 will be difficult for the stock market as the firm expects recession and market slowdown during the year. While the firm still recommends investors to pile into stocks for the long term, it said investors should only buy those individual stocks which can do well during recessions and inflation. RBC said while the jury is still out on whether we are headed for hard or soft landing, it does expect recession to hit the US stock market soon. Among the biggest reasons behind this rationale is rising interest rates and drying US household savings, which were built up during the pandemic era.

Photo by Kaleidico on Unsplash

Our Methodology

For this article we scanned Insider Monkey’s database of 910 hedge funds and picked 13 blue chip stocks trading under $100 with the highest number of hedge fund investors. For this article we defined blue chip companies as ones with over $10 billion market cap, significant market share in their respective industries and strong fundamentals and reputation.

Best Blue Chip Stocks Under $100

13. Occidental Petroleum Corporation (NYSE:OXY)

Number of Hedge Fund Holders: 73

Occidental Petroleum Corporation (NYSE:OXY) is one of the top energy companies. Warren Buffett’s Berkshire owns a stake worth over $13 billion in the company. Overall, 73 hedge funds tracked by Insider Monkey reported owning stakes in Occidental Petroleum Corporation (NYSE:OXY) as of the end of the second quarter. Occidental Petroleum Corporation (NYSE:OXY) featured in our list of the top stocks Wall Street analysts were raising prices targets on as Citigroup analyst Scott Gruber raised the price target for Occidental Petroleum Corporation (NYSE:OXY) from $62.00 to $67.00.

Here is what Smead Value Fund has to say about Occidental Petroleum Corporation in its Q3 2022 investor letter:

“Our top-performing stocks in the quarter includes Occidental Petroleum (NYSE:OXY). Oil and gas have been the best game in the stock market town this year and it was a pleasant surprise to see home builders pick up even with dour news on interest rates and the economy. For the first three quarters of the year, we should change the name of our fund to the Jed Clampett Fund. Occidental Petroleum (NYSE:OXY), was one of the standouts. Up through the bear market came a “bubblin’ crude!”

12. Pfizer Inc. (NYSE:PFE)

Number of Hedge Fund Holders: 73

Pfizer Inc. (NYSE:PFE) is one of the biggest pharma companies in the world. Pfizer Inc. (NYSE:PFE) is priced well under $100 and hedge funds simply love this name, thanks to the company’s diverse pipeline, growth catalysts and dividends. Recently, Pfizer Inc. (NYSE:PFE) said it expects about 24% of the eligible US population to get updated COVID-19 vaccinations.

As of the end of the second quarter of 2023, 73 hedge funds out of the 910 funds tracked by Insider Monkey reported owning stakes in Pfizer Inc. (NYSE:PFE). The most significant stakeholder of Pfizer Inc. (NYSE:PFE) was Ric Dillon’s Diamond Hill Capital which owns a $253 million stake in the company.

Diamond Hill Large Cap Strategy made the following comment about Pfizer Inc. (NYSE:PFE) in its Q2 2023 investor letter:

“Our bottom contributors in Q2 included health insurance company Humana, biopharmaceutical company Pfizer Inc. (NYSE:PFE) and global entertainment company Disney. Pharmaceutical giant Pfizer has been dealing with a decline in sales due to lower COVID vaccination levels. Additionally, in 2023, management is increasing spend as the company invests in new product launches. That said, we remain positive about the long-term company fundamentals.”

11. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 75

Wells Fargo & Company (NYSE:WFC) ranks 11th in our list of the best blue chip stocks to buy under $100 according to hedge funds. As of the end of the second quarter of 2023, 75 hedge funds reported owning stakes in Wells Fargo & Company (NYSE:WFC). The biggest stakeholder of Wells Fargo & Company (NYSE:WFC) during this period was Natixis Global Asset Management’s Harris Associates which owns a stake worth about $1 billion in the company.

In September, Wells Fargo & Company (NYSE:WFC) CFO Mike Santomassimo, according to a Reuters report, said that the company could announce more layoffs to increase efficiency. Wells Fargo & Company (NYSE:WFC) has been cutting its workforce since 2023.

Here is what Tweedy, Browne has to say about Wells Fargo & Company (NYSE:WFC) in its Q1 2023 investor letter:

“The Funds received very little in the way of return contributions from many of their financial, energy, media, and healthcare holdings. While it would appear that a crisis was avoided by the quick intervention of bank regulators in the US and Switzerland, some uneasiness still remains in the global banking community. This turmoil couldn’t help but have a negative impact on investor sentiment and in turn on Fund bank holdings such as Wells Fargo (NYSE:WFC).”

10. Citigroup Inc. (NYSE:C)

Number of Hedge Fund Holders: 75

Citigroup Inc. (NYSE:C) ranks 10th in our list of the best blue chip stocks under $100 to buy according to hedge funds. As of the end of the second quarter of 2023, 75 hedge funds tracked by Insider Monkey had stakes in Citigroup Inc. (NYSE:C). The biggest stake in Citigroup Inc. (NYSE:C) was owned by Warren Buffett’s Berkshire Hathaway which owns a $2.5 billion stake in the company.

Earlier this year Citigroup Inc. (NYSE:C) upped its dividend by 3.9%.

Latest reports suggest that Citigroup Inc. (NYSE:C) is getting ready for a major restructuring that would include reassignments, retraining and layoffs of employees.

Patient Capital Opportunity Equity Strategy made the following comment about Citigroup Inc. (NYSE:C) in its Q2 2023 investor letter:

“We’ve recently been adding to Citigroup Inc. (NYSE:C). After perennially disappointing for decades, even the most bullish financial investors aren’t interested (a good thing in our view!). CEO Jane Fraser is making all the right moves: exiting underperforming consumer businesses, investing to improve the tech and operating infrastructure, returning capital to shareholders. These actions should result in improving returns on equity. The market reaction is a giant shrug.

We should start to see serious cost improvements in late 2024 accompanied by improving returns on equity. The stock trades at ~$46, 55% of its $85 tangible book value. The company is confident it can reach 11-12% return on tangible common equity by 2025 when it’s tangible book should be greater than $100. If it reaches its return target, as we believe, Citi should trade back to tangible book, implying a more than double over the next couple years. Meanwhile, you collect the 4.5% annual dividend, which is currently a better yield than long-term treasuries.

9. Datadog, Inc. (NYSE:DDOG)

Number of Hedge Fund Holders: 78

Cloud applications security and monitoring platform company Datadog, Inc. (NYSE:DDOG) ranks 9th in our list of the best blue chip stocks to buy under $100 according to hedge funds. Datadog, Inc. (NYSE:DDOG) is a potential AI play as AI applications based on Cloud see an exponential increase. Earlier this month, Piper Sandler upgraded Datadog, Inc. (NYSE:DDOG) adding that the company is showing “signs of stability” as well as a boost from artificial intelligence.

Pipe Sandler’s analyst Rob Owens upped his rating for the stock to Overweight from Neutral and gave a $115 price target.

“We favor the disruptive nature of the company’s solutions, think its platform play will continue to resonate and believe its best days are still ahead,” Owens said.

RiverPark Large Growth Fund made the following comment about Datadog, Inc. (NASDAQ:DDOG) in its Q1 2023 investor letter:

“Datadog, Inc. (NASDAQ:DDOG): DDOG was a top detractor in the quarter. The company reported strong 4Q results including 44% revenue growth and 30% earnings growth but gave cautious revenue guidance for 2023. Macroeconomic headwinds have caused clients to slow the transition of workloads to the cloud and instead to optimize current capacity. Despite this temporary slowdown, DDOG still expects revenue to grow nearly 25% in 2023.

As businesses have transitioned to cloud software infrastructure, much of which is in isolated data silos, it has become increasingly difficult for data engineers to monitor and analyze system performance. Datadog provides a SaaS software platform to monitor and analyze the system performance of software applications and IT infrastructure by giving users a single page view to observe their company’s technology stack. The company has quickly grown its revenue from $100 million in 2017 to $1.7 billion in 2022 and, we believe, should continue to grow revenue at more than 20% annually as it penetrates its $40 billion and fast-growing market. Less than 10% of software applications are currently monitored. The company’s dollar-based net retention rate has been 130%+ as existing customers continue to use an increasing number of products and the company continues to add new features. As of 4Q22, 81% of customers used 2+ products, while only 18% of customers used 6+ products (up from less than 1% two years ago). As an extremely capex light software business, DDOG already has significant free-cash-flow ($350m in 2022) and free-cash-flow margins (21% in 2022).”

8. Teck Resources Limited (NYSE:TECK)

Number of Hedge Fund Holders: 79

Natural resources company Teck Resources Limited (NYSE:TECK) shares have gained about 24% over the past one year. Analysts believe Teck Resources Limited (NYSE:TECK) is a buy on expectations that the company would be acquired in part or full by Glencore. Teck Resources Limited (NYSE:TECK) is also a solid copper play. Copper is seeing a rising demand in the world amid electrification.

Insider Monkey’s database of 910 hedge funds shows that 79 hedge funds had stakes in Teck Resources Limited (NYSE:TECK). The biggest stakeholder of Teck Resources Limited (NYSE:TECK) was Eric W. Mandelblatt’s Soroban Capital Partners which owns a $424 million stake in the company.

7. Micron Technology, Inc. (NASDAQ:MU)

Number of Hedge Fund Holders: 86

Micron Technology, Inc. (NASDAQ:MU) shares have gained about 37% year to date. For the fiscal first quarter, Micron Technology, Inc. (NASDAQ:MU) expects sales to be between $4.2 billion and $4.6 billion. MU ranks x in our list of the best blue chip stocks to buy under $100.

Here’s what Micron Technology, Inc. (NASDAQ:MU) said about its Q1 guidance in its latest earnings call:

“We expect revenue to be $4.4 billion, plus or minus $200 million. Gross margin to be in the range of negative 4%, plus or minus 200 basis points. And operating expenses to be approximately $900 million, plus or minus $15 million. We expect tax expense of approximately $80 million. Based on a share count of approximately 1.1 billion shares, we expect EPS to be a loss of $1.07, plus or minus $0.07. In closing, we achieved many successes in fiscal 2023 despite facing a historic downturn. We sustained our technology, product and manufacturing leadership and achieved mature yields in record time on the industry’s most advanced nodes in DRAM and NAND. Micron’s leading product announcements position us well to address the growing performance requirements of data-centric computing.”

Read the full earnings call transcript here.

As of the end of the second quarter of 223, 86 hedge funds tracked by Insider Monkey reported owning stakes in Micron Technology, Inc. (NASDAQ:MU). The biggest stakeholder of Micron Technology, Inc. (NASDAQ:MU) during this period was Ken Griffin’s Citadel Investment Group which owns a $425 million stake in the company.

Here is what Claret Asset Management has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2022 investor letter:

“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party is over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”

6. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 86

PayPal Holdings, Inc. (NASDAQ:PYPL) shares were owned by 86 hedge funds out of the 910 hedge funds tracked by Insider Monkey as of the end of the second quarter of 2023. The biggest hedge fund stakeholder of PayPal Holdings, Inc. (NASDAQ:PYPL) during this period was John Overdeck and David Siegel’s Two Sigma Advisors which owns a $381 million stake in the company.

PayPal Holdings, Inc. (NASDAQ:PYPL) shares saw a ratings cut from MoffettNathanson as the firm expects PayPal to face tough competition from Apple Pay and Block, Inc. (NYSE:SQ)’s Cash App.

RiverPark Large Growth Fund made the following comment about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2023 investor letter:

“PayPal Holdings, Inc. (NASDAQ:PYPL): PayPal shares were a top detractor in the quarter despite reporting better than anticipated 1Q earnings and raising guidance for the remainder of 2023. Revenue of $7 billion grew 9% year over year, an acceleration from the prior year and quarter. EPS of 1.17 grew 33% year over year on better cost discipline leading to better operating margins. The disappointment was centered around weaker gross margins, as unbranded checkout, which has lower gross margins, accelerated faster than branded checkout. Management anticipates this trend to continue and therefore guided to lower gross margins for the remainder of the year. Despite the gross margin headwind, operating margins continue to expand due to expense discipline.

PayPal is the most accepted digital wallet – with almost triple the acceptance of Apple Pay, the number two digital wallet – providing the purest exposure to the secular growth in ecommerce-driven digital payments. PayPal is also a key beneficiary of consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 1Q non-GAAP operating margin of 23%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel at least a high teens earnings growth rate over the next five years. This, to us, presents an excellent risk/reward given that PYPL trades at a below market multiple.”

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