3 blue chip stocks to buy for a healthy and wealthy portfolio
While the concept of bidding heavily on blue chip stocks for a healthy portfolio isn’t exactly the most exciting proposition, in the current circumstances, it might make the most sense. Basically, with Democrats and Republicans at loggerheads over the debt ceiling crisis, anything can happen. At present, Reuters reports that both sides have made progress. Unfortunately, a deal remains uncertain.
Of course, the biggest concern is the failure of the United States to fulfill its obligations. Such a catastrophic outcome could lead to a recession or even a global financial crisis if the default is prolonged. At the same time, raising the debt ceiling whenever policymakers run into fiscal problems raises a moral dilemma. Either way, the nation is at a tricky moment, which bodes well for the best blue-chip stocks to buy.
Basically, investors trust the biggest and most established companies. Similarly, market participants should consider ideas that would be relevant regardless of external circumstances. Below are healthy and wealthy portfolio stocks to consider.
Academically, soft drink giant Coca Cola (NYSE:KO) does not exactly represent a must-have brand. I mean, as long as you have access to clean water, the often sugary Coca-Cola drinks represent wants, not needs. However, it’s also fair to point out that Americans love their pick-me-ups. According to one statistic, about 90% of us consume caffeine in one form or another on a daily basis.
Therefore, it is entirely plausible that Coca-Cola could benefit from the compromise effect. Regardless of what happens with the debt deal, consumer economics may struggle. In response, people might avoid buying coffee at an overpriced cafe (without naming names) for cans of Coke. Clearly, going the grocery route gives consumers a lot more bang for their buck.
Admittedly, it seems that Wall Street analysts and I are on the same page. KO carries a strong consensus buy rating, with experts issuing an average price target of $69.64. This forecast implies more than 14% upside potential. The strength of Coca-Cola is mainly based on its profitability. For example, its prior year net margin came in at 22.69%, above 94.39% of its peers. Therefore, KO is an excellent example of blue chip stocks for a healthy portfolio.
If you’re focused on investing in blue-chip stocks during this tumultuous time, then trustworthy insurance Allstate (NYSE:ALL) should be at the top of your radar. To be clear, insurance companies are boring investment ideas. And generally, they lack distinct overall strength in their finances. Nevertheless, companies like Allstate can thrive because they command a captive or hostage audience.
For example, in almost all states, drivers must carry car insurance. Even for the few states that allow waivers, the dynamic begs the question: why would you accept such an offer? According to data from the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA), traffic fatalities increased 18.4% in the first half of 2021 compared to the same period a year earlier.
Of course, auto insurance doesn’t resuscitate people. However, the data above confirms that as a result of the pandemic, the roads have become more dangerous. Therefore, ALL makes sense as one of the top stocks for a healthy portfolio. Finally, analysts rate ALL as a consensus Moderate Buy. Their average price target sits at $134.27, implying more than 18% upside potential.
CVS Health (CVS)
While the best blue chip stocks to buy have a reputation for safety and reliability, sometimes you just want to speculate. Luckily, you don’t always have to turn to the dumpster of the capital market for this business. Instead, you can look at entities like SVC Health (NYSE:SVC). Although the retail drugstore giant commands a relevant profile, the market simply doesn’t see the positive narrative.
According to a Barrons report, CVS earlier in May beat analysts’ first-quarter earnings and revenue estimates. Unfortunately, management also lowered its forecast for the full year. Naturally, with the equity sector representing a forward-looking arena, CVS fell. Since opening in January, shares have fallen almost 26%. Over the past six months, they have fallen by more than 32%.
However, what could make CVS one of the top stocks for a healthy portfolio centers on analyst sentiment. Even with the disappointing news on the Q1 release, many analysts view the stock as a buy. On average, experts predict a price target of $95.88, implying an upside potential of over 39%.
As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.