10 Best Blue Chip Stocks to Buy According to Hedge Funds
In this article, we take a look at 10 best blue chip stocks to buy according to hedge funds. If you want to see more best blue chip stocks to buy according to hedge funds, go directly to 5 Best Blue Chip Stocks to Buy According to Hedge Funds.
The market is more uncertain than it has been in a while.
In early March, Silicon Valley Bank, the 16th largest bank by assets in the United States at the end of last year, failed. Later in the same month, UBS has had to buy out Credit Suisse given substantial capital flight in the latter in recent quarters.
Meanwhile, inflation is still pretty high and the Federal Reserve is expected to continue to raise interest rates.
Given the uncertainty, leading blue chips can be more attractive than average stocks.
Blue chips are established companies that are generally well known and that have substantial competitive advantages.
Many blue chips generally have an extensive history of profitability and have growth potential. Many blue chips also have considerable market capitalization that rank among the market's largest by that metric. Furthermore, many blue chips return excess capital back to shareholders either through dividend or share buybacks or both.
Some leading blue chips in technology can also benefit from the growth of artificial intelligence as they are either make AI software like Microsoft Corporation (NASDAQ:MSFT) or they provide AI processing power like Amazon.com, Inc. (NASDAQ:AMZN). For those of you interested, check out 12 Biggest Cloud Providers by Market Share in the World.
Blue chips also face the same headwinds as the market.
If the economy slows further given the interest rate increases, blue chip stocks might not do well. If valuations in the broader market decreases, the valuations of many blue chips could decrease too.
Despite the uncertainty, some leading blue chips with competitive advantages are trading for pretty attractive valuations given the decline in the market over the past few years. Although there could be more downside in the near term, many leading blue chips could do well in the long term as the U.S. economy and global economy continues to grow.
As a result of the uncertainty, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
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Methodology
For our list of 10 Best Blue Chip Stocks to Buy According to Hedge Funds, we picked 10 blue chip stocks with competitive advantages that ranked among the top 25 most widely held stocks by elite funds in our database of 943 hedge funds at the end of Q4.
We ranked each stock based on the number of hedge funds in our database that owned shares of the same stock at the end of the fourth quarter.
For those of you interested, check out 13 Best Annual Dividend Stocks to Buy Now.
10 Best Blue Chip Stocks to Buy According to Hedge Funds
10. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 97
S&P Global Inc. (NYSE:SPGI) is a leading financial data provider that's held by 97 hedge funds in our database of 943 total funds at the end of Q4. By comparison, 90 hedge funds in our database owned shares of S&P Global Inc. (NYSE:SPGI) at the end of Q3, indicating that several more hedge funds entered into positions in the four quarter. S&P Global Inc. (NYSE:SPGI) has substantial scale and also a strong brand, which gives it competitive advantages versus smaller competitors. In terms of valuation, S&P Global Inc. (NYSE:SPGI) trades for a forward P/E ratio of 23.77 as of March 21. S&P Global Inc. (NYSE:SPGI) has long term growth potential if the broader market increases in the long term as that could lead to more demand for the company's services assuming it maintains its market share.
Alongside Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), S&P Global Inc. (NYSE:SPGI) is a blue chip that's widely held by many hedge funds in our database at the end of Q4.
9. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 99
The Walt Disney Company (NYSE:DIS) is a blue chip entertainment conglomerate that's owned by 99 hedge funds in our database, ranking the stock #9 on our list of 10 Best Blue Chip Stocks to Buy According to Hedge Funds. In an increasingly digital world, The Walt Disney Company (NYSE:DIS) has growing digital assets with a leading streaming service in Disney+ and also a majority stake in Hulu. In terms of Disney+, the company recently increased the price by 38% in December in the ad supported streaming product with 94% of subscribers staying with the service after the price increase. With growth and price increases, management has said they expect Disney+ to be profitable sometime in fiscal 2024.
In the long term, The Walt Disney Company (NYSE:DIS) also has potential in the metaverse. For those of you interested, check out 10 Most Promising Metaverse Stocks to Buy.
8. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 100
JPMorgan Chase & Co. (NYSE:JPM) is one of the largest banks in the United States. Although shares of the stock have declined recently given the failure of Silicon Valley Bank, JPMorgan Chase & Co. (NYSE:JPM) has arguably gained more business as a result with more deposits moving from regional banks to JPMorgan Chase & Co. (NYSE:JPM). While it might have near term downside if there are more bank failures, America's largest bank by assets has substantial long term earnings power. 100 hedge funds in our database owned shares of JPMorgan Chase & Co. (NYSE:JPM) at the end of Q4, ranking it among the top 25 most widely held stocks among the elite funds we follow.
7. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 100
100 hedge funds in our database also held shares in Bank of America Corporation (NYSE:BAC) at the end of Q4, ranking it #7 on our list of 10 Best Blue Chip Stocks to Buy According to Hedge Funds. Like JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC) has substantial scale with total assets of $2.41 trillion, ranking second in the United States. Like other banks, Bank of America Corporation (NYSE:BAC) faces near term downside if the financial sector weakens further. With its substantial market share, Bank of America Corporation (NYSE:BAC) has attractive earnings power in the long term.
6. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 117
Salesforce, Inc. (NYSE:CRM) is an application software company that's held by 117 hedge funds in our database at the end of the fourth quarter. For full year ended January 31, 2023, Salesforce, Inc. (NYSE:CRM) had $31.4 billion in revenue, up 18% year over year, and operating cash flow of $7.1 billion, up 19% year over year. Of the total revenue, subscription and support revenue were $29.02 billion, up 18% year over year, giving the company relatively more predictability in terms of sales. As of March 21, Salesforce, Inc. (NYSE:CRM) has a forward P/E of 21.32.
Like Salesforce, Inc. (NYSE:CRM), Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) are blue chips that are held by many hedge funds in our database at the end of Q4.
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Disclosure: None. 10 Best Blue Chip Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
