In this article, we discuss the top 10 blue-chip stocks to buy in 2022. You can skip our detailed analysis of these blue-chip stocks and go directly to Top 5 Blue Chip Stocks to Buy in 2022.
Blue-chip stocks are ones instantly recognized as established, dominant names in their respective industries. Take Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and The Coca-Cola Company (NYSE:KO), for example. These are industry giants with dependable business models, and their products/services have passed the test of time. These firms have strong track records when it comes to delivering value to shareholders, and boast market caps in the billions. Not just that, most of these firms offer dividend payments, which protect investors’ money during times of low capital gains.
Therefore, these stocks are safe bets given their ability to manage well during economic uncertainty. Since these are market leaders with large resources, they provide steady albeit moderate growth potential and are sure to multiply your money a few years down the line.
The Dow Jones Industrial Average, an index which tracks 30 blue chip stocks listed in the US, gained 18.7% in 2021, as compared to the 23.21% gain posted by the S&P MidCap 400 index, and the 25.27% growth recorded by the S&P SmallCap 600 index. Over the last three years, the Dow Jones Index has posted 55.77% in returns, as compared to the 70.89% and 65.89% returns posted by the MidCap 400 and SmallCap 600 indexes respectively.
But why would now be a good time to invest in blue-chip stocks? The US Federal Reserve has raised interest rates for the first time in more than 3 years, with a 0.25 percentage point rate hike. It has also decided to increase interest rates a further 6 times during 2022. The Russian invasion of Ukraine has already put global financial markets into a state of nervousness. Oil prices are hovering near record valuations, and all this exaggerates the element of risk inherently present in any investment. Therefore, it might be a wise bet to consider bolstering your portfolio with some blue chip stocks.
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Our Methodology
We picked 10 blue-chip stocks with positive analyst ratings and growth catalysts in the near term. Hedge fund sentiment around each stock has been derived from Insider Monkey’s database of 924 elite hedge funds and is provided to give readers better context for their investment choices.
Top 10 Blue Chip Stocks to Buy in 2022
10. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 42
Defense stocks have been in the limelight ever since Russia invaded Ukraine, and Lockheed Martin Corporation (NYSE:LMT) is arguably the biggest name in the industry. The firm has worked on high-level contracts with the United States government for decades, and with a market cap of $122.18 billion, is one of the best blue chip stocks to buy in 2022.
On March 14, Germany announced plans to buy as many as 35 F-35 stealth fighter jets from Lockheed Martin Corporation (NYSE:LMT) to replace its ageing fleet of Tornado aircraft. The European nation recently announced a $112 billion budget to upgrade its military after the heightened conflict in Ukraine.
Wolfe Research analyst Michael Maugeri on February 28 upgraded Lockheed Martin Corporation (NYSE:LMT) to ‘Outperform’ from ‘Peer Perform’ and set a $467 price target. The analyst noted that the defense sector is poised to see growth in the coming months as military budgets around the world see hikes amid the Russian invasion of Ukraine. He is bullish on Lockheed Martin Corporation (NYSE:LMT) owing to its large exposure in the global market and the growing demand for its aeronautics products.
Out of all the hedge funds tracked by Insider Monkey, 42 were long Lockheed Martin Corporation (NYSE:LMT) in the fourth quarter, with combined holdings worth $976.1 million. D E Shaw held the biggest stake in Lockheed Martin Corporation (NYSE:LMT) during Q4 2021, comprising of 482,000 shares worth $171.4 million and representing a 59% increase in holding over the preceding quarter.
For the fourth quarter, Lockheed Martin Corporation (NYSE:LMT) posted an EPS of $7.24, exceeding estimates by $0.10. Quarterly revenue stood at $17.73 billion, outperforming analysts’ forecasts by $71.71 million and representing a 4.09% jump from the year-ago quarter.
RiverPark Advisors, LLC talked about Lockheed Martin Corporation (NYSE:LMT) in its Q4 2020 investor letter. The fund said:
“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and The Coca-Cola Company (NYSE:KO), Lockheed Martin Corporation (NYSE:LMT) is a blue chip stock on the radar of investors.
9. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 48
General Dynamics Corporation (NYSE:GD) is another defense company working with the US government on a range of military equipment, such as missiles, nuclear-powered submarines, rockets and tanks. The firm stands to benefit from the rise in geopolitical uncertainty around the world, and with a proven track record spanning decades delivering military products to the American government, is a top blue chip stock to buy in 2022.
On March 7, Wells Fargo analyst Matthew Akers maintained an ‘Overweight’ rating on General Dynamics Corporation (NYSE:GD) shares, and raised the price target to $282 from $235. The analyst sees the firm’s valuation likely remaining high for some time to come as the Russia-Ukraine crisis unfolds. As of March 17, shares of General Dynamics Corporation (NYSE:GD) have gained 28.60% in the last 12 months, and 19.16% in the last 6 months.
On March 2, General Dynamics Corporation (NYSE:GD) declared a quarterly dividend of $1.26 per share, representing a 5.9% increase from its prior dividend of $1.19. This marked the 25th consecutive year of annual dividend increases by the firm. As of March 17, it offers a dividend yield of 2.19%.
According to the database of hedge funds tracked by Insider Monkey, 48 hedge funds reported owning stakes in General Dynamics Corporation (NYSE:GD) in the fourth quarter with a combined value of $7.18 billion. This shows an upward trend from the quarter before, were 36 hedge funds held positions worth $6.71 billion in the firm. In the fourth quarter, Longview Asset Management held more than 30 million shares of General Dynamics Corporation (NYSE:GD) with a value of $6.26 billion, making it the top shareholder of the firm.
Investment firm Oakmark Funds mentioned General Dynamics Corporation (NYSE:GD) in its Q1 2021 investor letter, stating:
“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer term view, the company’s business jet franchise should benefit from a multi-year investment program in new, differentiated product. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp up in revenue related to next generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 62
The semiconductor industry is expected to reach new heights in the coming years, and the rapid digitization of the world is already pushing the boundaries of semiconductor manufacturing. Broadcom Inc. (NASDAQ:AVGO) is a big name in the semiconductor space and ranks among the top blue-chip stocks to buy in 2022 with a market cap of $242.01 billion.
On March 4, analyst William Stein of Truist kept his ‘Buy’ rating on Broadcom Inc. (NASDAQ:AVGO) stock, and raised the price target to $686 from $659, citing the firm’s Q4 earnings beat leading to improving EBITDA and EPS. He notes that sales growth is re-accelerating to 20% in the near term, which offers ‘even more confidence’.
Reporting its Q4 earnings on March 3, Broadcom Inc. (NASDAQ:AVGO) announced earnings per share of $8.39, which came in above consensus estimates by $0.24. Revenue for the quarter was recorded at $7.71 billion, above analysts’ forecasts by $99.60 million, and signaling a 15.79% jump year-on-year.
Hedge fund sentiment was up on the semiconductor manufacturer, with 62 hedge funds holding stakes in Broadcom Inc. (NASDAQ:AVGO) in the fourth quarter, as compared to 50 hedge funds in the previous quarter.
Investment firm Richie Capital Group talked about Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter. Here’s what the fund had to say:
“Broadcom (AVGO – up 36.5%) – The semiconductor device manufacturer reported an outstanding Fiscal Q4. Results (and guidance) exceeded Wall Street analyst expectations, and the company raised its dividend by 14% and announced a new stock-repurchase program. Semiconductor related revenue grew 17% while software revenue grew 8%. On the negative side, it was rumored that Apple, their largest customer, is making plans to develop their own wireless chips. This would be a blow to Broadcom. However, AVGO has a $15 billion contract with Apple that is good through 2023 and includes radio frequency parts such as amplifiers, filters and switches.”
7. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 67
The Procter & Gamble Company (NYSE:PG) makes and sells branded consumer products around the globe, including beauty, health care, grooming, baby care, and feminine products. Based in Ohio, P&G is a dominant name in the international arena and is not as prone to market volatility given its vast portfolio of consumer goods. The firm has grown its dividend payout for 65 years in a row and offers a healthy 2.32% yield as of March 17.
On January 20, analyst Dara Mohsenian of research firm Morgan Stanley reiterated an ‘Overweight’ rating on The Procter & Gamble Company (NYSE:PG) stock and upped the price target to $177 from $161. The analyst sees P&G as their top pick in the Household Products segment and expects sustained revenue growth for the firm. On March 16, Deutsche Bank analyst Steve Powers maintained a ‘Buy’ rating on The Procter & Gamble Company (NYSE:PG) shares with a revised price target of $173 from $179.
In the fourth quarter, The Procter & Gamble Company (NYSE:PG) posted an EPS of $1.66, outperforming estimates by $0.01. Revenue for the fourth quarter came in at $20.95 billion, which was up 6.12% year-over-year and exceeded estimates by $617.36 million.
In the fourth quarter of 2021, 67 out of 924 elite hedge funds tracked by Insider Monkey held stakes in The Procter & Gamble Company (NYSE:PG) with a combined value of $6.61 billion. GQG Partners was the top shareholder of The Procter & Gamble Company (NYSE:PG) in the fourth quarter, with a position consisting of 7.53 million shares worth $1.23 billion.
On March 8, The Procter & Gamble Company (NYSE:PG) announced the suspension of all new capital investments in Russia after its attack on Ukraine and reduced its product portfolio in the country to focus solely on basic hygiene, health, and personal products.
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 70
Up next is The Coca-Cola Company (NYSE:KO), a household name around the world that deals in the sale of soft drink beverages. It has raised its dividend payout for 60 consecutive years and offers a 2.93% yield as of March 17. Investors have long relied on The Coca-Cola Company (NYSE:KO) for stability and growth during good times and bad, and Warren Buffett is among the most prominent shareholders of the firm. His Berkshire Hathaway has built its position in the company for decades and is currently its largest shareholder with 400 million shares valued at $23.68 billion.
In total, 70 hedge funds reported holding stakes in The Coca-Cola Company (NYSE:KO) in the fourth quarter, with combined holdings of $28.61 billion. This is up from 61 hedge funds in the preceding quarter with positions worth $25.13 billion in the Atlanta-based firm.
On February 8, Morgan Stanley analyst Dara Mohsenian kept an ‘Overweight’ rating on The Coca-Cola Company (NYSE:KO) shares and raised the price target to $71 from $65. In the short term, Mohsenian expects an above-consensus post-Covid sales and earnings recovery from Coke, and in the longer-term, he forecasts a return to pre-Covid ‘outsized’ sales growth and better margin performance than peers. On February 15, Evercore ISI analyst Robert Ottenstein maintained an ‘Outperform’ rating on The Coca-Cola Company (NYSE:KO) shares, and raised the price target to $70 from $63, noting that the firm continues to improve its long-term outlook and business model.
The Coca-Cola Company (NYSE:KO) posted an EPS of $0.45 for Q4 2021, outperforming estimates by $0.04. Quarterly revenue was recorded at $9.47 billion for the fourth quarter, exceeding analysts’ forecasts by $579.32 million and representing a 10.08% jump from the year-ago quarter.
In addition to Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT), The Coca-Cola Company (NYSE:KO) is an exciting blue-chip stock to buy in 2022.
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Disclosure. None. Top 10 Blue Chip Stocks to Buy in 2022 is originally published on Insider Monkey.
