In this article, we discuss 5 of the best blue chip stocks with strong balance sheets. If you want to see more of the best blue chip stocks with strong balance sheets, the risk/reward and methodology of this list, go directly to 10 Best Blue Chip Stocks With Strong Balance Sheets.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
As it is with premium smartphones, Apple Inc. (NASDAQ:AAPL) is the leader when it comes to fortress balance sheets. Given it is the most profitable tech company in the world, Apple Inc. (NASDAQ:AAPL) has substantial earnings power. For the twelve months ended September 24, 2022, Apple Inc. (NASDAQ:AAPL) earned net income of $99.8 billion, up from around $94.68 billion in the prior year. With its substantial earnings, strong business, and competitive advantages, Apple Inc. (NASDAQ:AAPL) has the highest long term credit rating possible according to Moody’s at ‘Aaa’.
Wedgewood Partners commented on Apple Inc. (NASDAQ:AAPL) in a Q3 2022 investor letter,
Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Although its shares may have declined 39% year to date, Alphabet Inc. (NASDAQ:GOOG) ended Q3 2022 with a net cash position of $101 billion. Alphabet Inc. (NASDAQ:GOOG) also reported net income of $13.91 billion for Q3 despite the slowing growth and the macroeconomic headwinds. With its substantial resources, Alphabet Inc. (NASDAQ:GOOG) could potentially buy back stock to add value or it could invest in new initiatives that could potentially help it grow in the future.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 184
In August 2022, Meta Platforms, Inc. (NASDAQ:META) raised $10 billion with its first ever bond offering and shortly after received an “A1” rating from Moody’s. The ratings agency explained its rating for Meta Platforms, Inc. (NASDAQ:META),
Meta’s credit profile incorporates its strong mobile reach, highly desirable demographic profile and engaging apps, which contribute to its pivotal position in the extremely competitive and growing digital advertising market. Meta is supported by its very strong financial profile and financial flexibility, including over $119 billion in revenues and over $54 billion in EBITDA (with Moody’s adjustments) for the twelve months ended 3/31/22. It has robust profit margins and free cash flow generation, notwithstanding the current cyclical economic challenge for advertising.
184 hedge funds in our database owned shares of Meta Platforms, Inc. (NASDAQ:META) at the end of Q2 2022.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Given e-commerce is a capital intensive business, Amazon.com, Inc. (NASDAQ:AMZN) doesn’t have as much cash on its balance sheet as Alphabet does. As of September 30, 2022, Amazon.com, Inc. (NASDAQ:AMZN) had cash and cash equivalents of $34.95 billion and marketable securities of $23.72 billion. While it doesn’t have as much cash on its balance sheet, Amazon.com, Inc. (NASDAQ:AMZN) nevertheless has a strong balance sheet given its earnings power.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Given its strong cash generation and around $47 billion in net cash at the end of September, Microsoft Corporation (NASDAQ:MSFT) has one of the strongest balance sheets in the world. Ratings agencies agree as Microsoft Corporation (NASDAQ:MSFT) has an ‘AAA’ corporate credit rating from Standard & Poor’s and an ‘Aaa’ credit ratings from Moody’s.
With 258 hedge funds in our database owning shares at the end of Q2 2022, Microsoft Corporation (NASDAQ:MSFT) ranks #1 on our list of 10 Best Blue Chip Stocks With Strong Balance Sheets.
You can also take a look at 20 Most Admired Companies in the World in 2022 and 15 Biggest Dow Companies By Market Cap.
