3 Blue-Chip Retail Stocks to Boost Your Dwindling Confidence

In the dynamic realm of the stock market, maintaining confidence and seeking avenues for growth can be a formidable task for investors. Especially now, amid the backdrop of elevated interest rates, underlying inflationary pressures and geopolitical uncertainties in the Middle East, the quest for stability becomes even more challenging.

The recent decline in consumer sentiment, hitting its lowest point in six months, underscores the impact of these factors. In May, the University of Michigan Survey of Consumers sentiment index registered a notable decrease, falling to 67.4 from April's reading of 77.2. Such a downturn in sentiment has the potential to ripple through consumer spending patterns, a crucial driver of economic activity.

However, despite these challenges, there are opportunities for investors to bolster their confidence and navigate the market landscape. For investors seeking a secure and prosperous investment roadmap, blue-chip companies present a compelling opportunity.

Their stability, adaptability and commitment to shareholder value make them the essential elements of a well-diversified investment strategy. These market titans, boasting immense market capitalization, robust fundamentals and a proven track record, demonstrate their ability to weather economic headwinds.

Blue-chip companies tend to be less susceptible to sudden fluctuations in stock prices, rendering them a dependable choice for both seasoned and novice investors. Furthermore, for income-oriented investors, blue-chip companies reward shareholders with regular dividend payouts, further enhancing stability.

These blue-chip companies possess a winning combination of established market positions, strong brand recognition, loyal customer bases and extensive market penetration. Such traits provide these companies with a distinct competitive edge and help unlock new opportunities, thus making them investor favorites.

By investing in blue-chip stocks, investors can build a well-diversified portfolio. Here, we have identified three stocks from the Retail - Wholesale sector — Lowe's Companies, Inc. LOW, Costco Wholesale Corporation COST and Walmart Inc. WMT.

Past-Year Price Performance


Zacks Investment Research
Image Source: Zacks Investment Research

3 Prominent Picks

Lowe's Companies: This home improvement retailer is worth considering. Lowe’s has implemented a comprehensive Pro-focused strategy, emphasizing improved product availability, timely delivery and an expanded assortment, complemented by a rewards program. Strategic growth initiatives, such as store expansion and enhanced customer experiences, aim to position the company as a top omnichannel retailer. Investments in service offerings, operational efficiency and long-term drivers like sustained home improvement demand support growth and profitability.

Lowe's Companies has a market cap of $133.3 billion as of May 13, 2024. This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company pays out a quarterly dividend of $1.10 ($4.40 annualized) per share, giving a 1.9% yield at the current stock price. LOW’s payout ratio is 34, with a five-year dividend growth rate of 21.8%. (Check LOW’s dividend history here)

Costco: This consumer defensive stock has been surviving the market turmoil pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been this discount retailer’s primary strengths. Costco's distinctive membership business model and pricing power set it apart from traditional players. Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots.

Costco has a market cap of $343.8 billion. This Zacks Rank #3 (Hold) stock has a trailing four-quarter earnings surprise of 2.6%, on average.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 4.6% and 9.2%, respectively, from the year-ago period’s actuals. The company pays out a quarterly dividend of $1.16 per share ($4.64 annualized), giving a 0.6% yield at the current stock price. COST’s payout ratio is 26, with a five-year dividend growth rate of 11.7%.

Walmart: This omnichannel retail giant has been diligently working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.

Walmart has a market cap of $486.9 billion. This Zacks Rank #3 stock has a trailing four-quarter earnings surprise of 7.3%, on average.

The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 3.9% and 6.3%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of about 21 cents per share (83 cents annualized), giving a 1.4% yield at the current stock price. WMT’s payout ratio is 34, with a five-year dividend growth rate of 1.8%.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Free: See Our Top Stock And 4 Runners Up

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Walmart Inc. (WMT) : Free Stock Analysis Report

Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.