In this article, we discuss the 5 best blue chip stocks to buy. To read our detailed analysis of other blue chip stocks, the risk/reward and methodology of this list, take a look at the 10 Best Blue Chip Stocks To Buy.
5. The Walt Disney Company (NYSE:DIS)
No. of Hedge Fund Holders: 109
The Walt Disney Company (NYSE:DIS), along with its subsidiaries, is a top global family entertainment and media company. The company operates theme parks and also produces film and TV content. In recent years, The Walt Disney Company (NYSE:DIS)’s Disney+ has also gained market share against Netflix, Inc. (NASDAQ:NFLX) and Amazon.com, Inc. (NASDAQ:AMZN).
Hedge funds like the stock. At the end of the second quarter, 109 hedge funds tracked by Insider Monkey owned stakes in The Walt Disney Company (NYSE:DIS). The total value of these stakes is $3.2 billion. This is compared to 113 hedge funds in the previous quarter that held stakes worth $5.17 billion in the firm.
Here is what Oakmark Fund has to say about The Walt Disney Company (NYSE:DIS) in its 2 2022 investor letter:
“Disney (NYSE:DIS) is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney, Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”
4. Salesforce, Inc. (NYSE:CRM)
No. of Hedge Fund Holders: 116
Salesforce, Inc. (NYSE:CRM), headquartered in San Francisco, California, is a cloud-based software company that offers customer relationship management software and tools with a focus on sales, customer service, marketing automation, analytics, and application development.
Given its scale, Salesforce, Inc. (NYSE:CRM) is one of the leaders in the cloud industry. If it continues to grow earnings, shares of Salesforce, Inc. (NYSE:CRM) could offer upside to long term investors despite the company’s forward P/E earnings ratio of over 27.
According to Insider Monkey’s data, Salesforce, Inc. (NYSE:CRM) was part of 116 hedge fund portfolios at the end of June 2022, compared to 114 funds in the last quarter. Fisher Asset Management is the leading stakeholder of the company, with more than 15 million shares worth $2.6 billion.
Here is what Vulcan Value Partners has to say about Salesforce, Inc. (NYSE:CRM) in its Q1 2022 investor letter:
“Salesforce.com Inc. is the dominant provider of customer relationship management software and technology. Salesforce has high retention rates, pricing power, high free cash flow, and a competitive moat. The company continues to execute well. Margins decreased slightly during the fourth quarter but continue to be on path for material expansion over the long term. Salesforce is seeing increased spending as employees are returning to the office, and we believe the global pandemic has only improved its prospects.”
3. Apple Inc. (NASDAQ:AAPL)
No. of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL), headquartered in Cupertino, California, is a technology firm that specializes in consumer electronics, online services, and software.
Given its market capitalization of over $2.5 trillion, Apple Inc. (NASDAQ:AAPL) is one of the leading blue chips with substantial competitive advantages. With its brand strength, Apple Inc. (NASDAQ:AAPL) could sell similar products for higher prices. With its economies of scale, Apple Inc. (NASDAQ:AAPL) could also realize higher margins.
Analysts are also bullish on the firm’s long-term prospects, with investment advisories like KeyBanc, UBS, Wedbush, Evercore, and Barclays raising their price targets on the stock in recent months.
According to Insider Monkey’s data, 128 hedge funds were long Apple Inc. (NASDAQ:AAPL) at the end of the second quarter of 2022, with combined stakes worth $1.43 billion, compared to 131 funds the prior quarter worth $1.82 billion.
Here is what Alger Capital specifically said about Apple Inc. (NASDAQ:AAPL) in its Q2 2022 investor letter:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact production of apple products, however the manufacturing facilities have resumed activity.”
2. Visa Inc. (NYSE:V)
No. of Hedge Fund Holders: 166
Visa Inc. (NYSE:V) is a financial services company that enables global electronic financial transfers, most frequently through Visa credit cards, debit cards, and prepaid cards.
Given Visa Inc. (NYSE:V)’s scale, the company has higher margins than many of its competitors. The company had strong Q2 results with EPS of $1.98, beating analyst estimates by $0.23.
Visa Inc. (NYSE:V) is also the second most widely held Dow Jones index component among hedge funds that we tracked at the end of Q2 with 166 hedge fund holders.
Mayar Capital mentioned Visa Inc. (NYSE:V) in their Q2 2022 investor letter. This is what they had to say:
“Visa and Mastercardhave both been beneficiaries of the move away from cash over the course of the pandemic with the consequence that forward- looking opportunities for further penetration of card payments are lower than a couple of years ago. Moreover, cross-border payments – which were badly impacted by lockdowns – strongly recovered in 2021 and for both businesses are at or near to pre-COVID levels.”
1. Microsoft Corporation (NASDAQ:MSFT)
No. of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) is a multinational technology corporation that makes consumer electronics and computer software.
Given its strong financial balance sheet, strong market share in enterprise, and growing market share in the cloud, Microsoft Corporation (NASDAQ:MSFT) is regarded as a blue chip by many.
Microsoft Corporation (NASDAQ:MSFT) is also the most widely held Dow Jones component among hedge funds we track. According to data maintained by Insider Monkey, 258 funds were bullish on Microsoft Corporation (NASDAQ:MSFT) in the second quarter of 2022, compared to 259 the previous quarter.
Fisher Asset Management is the biggest stakeholder of Microsoft Corporation (NASDAQ:MSFT) as of the second quarter of 2022, with more than 28 million shares worth more than $7 billion.
Here is what Alger Capital specifically said about Microsoft Corporation (NASDAQ:MSFT) in its Q2 2022 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a positive dynamic change beneficiary of corporate America’s transformative digitization. during a previous earnings call, Microsoft’s CEO estimated that technology spending as a percent of GDP may increase from about 5% today to 10% in 10 years. Microsoft’s enterprise cloud product, Azure, is rapidly growing and accruing market share and its revenues increased 49% during the first three months of this year as the company’s revenue growth approached 20%. Microsoft’s share price declined despite its high unit volume growth as the broad equity market was down due to higher interest rates and slowing economic growth.”
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