U.S. stock markets have been on an impressive bull run over the past 21 months. However, the Dow, despite participating in the bull run, lagged its peers, the S&P 500 and the Nasdaq Composite. Wall Street’s blue-chip index (the Dow) is up 11.7% year to date. On the other hand, the broad-market S&P 500 Index and the tech-heavy Nasdaq Composite have rallied 20.6% and 21.7%, respectively.
However, from mid-August, the Dow has been northbound. At this stage, from an investment perspective, we have narrowed our search to three blue-chip stocks. These are — American Express Co. AXP, The Coca-Cola Co. KO and UnitedHealth Group Inc. UNH.
These stocks have strong earnings growth potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dow’s Momentum Likely to Continue
Last week, the Fed initiated the first cut interest rate since March 2020 with an aggressive reduction of 50 basis points. Unlike last year’s technology-driven rally, this year, the bull run is more broad-based.
The anticipation of a Fed rate cut and extremely high valuation of the technology sector, compelled market participants to shift from technology to other rate-sensitive cyclical sectors, such as utilities, industrials, financials, energy, materials and health care.
Dow is more inclined toward cyclical stocks. On Sept. 23, the blue-chip index posted all-time highs of 42,190.05 and 42,124.65 for intraday and closing-basis, respectively. Technically, at its current level of 42,124.65, the Dow is well above its 50-day and 200-day moving averages of 40,645.61 and 39,061.85, respectively.
The 50-day moving average line is generally recognized as a short-term trendsetter in financial literature, while the 200-day moving average is considered a long-term trendsetter. Historically, it has been noticed in the technical analysis space that whenever the 50-day moving average line surges ahead of the 200-day moving average line, a long-term uptrend for an asset (in this case the Dow Index) becomes a strong possibility.
Buy 3 Blue-Chip Stocks for Long-Term Gains
American Express Co.
American Express’ growth initiatives, like launching new products, reaching new agreements and forging alliances, are boosting its revenues. Consumer spending on travel and entertainment, which carries higher margins for AXP is advancing well. AXP’s solid cash-generation abilities enable the pursuit of business investments and prudent deployment of capital via buybacks and dividends.
AXP Stock’s Earnings Estimate Revisions on the Rise
American Express has an expected revenue and earnings growth rate of 9% and 17.1%, respectively, for the current year. The Zacks Consensus Estimate for the current quarter, current year and next year has improved in the past 30 days.
Image Source: Zacks Investment Research
The Coca-Cola Co.
Coca-Cola experiences positive business trends, as evidenced by its strong track record of beating expectations. In the second quarter of 2024, KO exceeded sales and earnings estimates for the sixth consecutive quarter, with both metrics showing year-over-year improvement. Strong revenue growth across most operating segments, supported by improved price/mix and unit volume growth aided results.
KO is well-poised to benefit from innovations and growing digital investments. KO has provided an optimistic view for 2024. We expect organic revenue growth of 10% for 2024, with an 8.3% positive price/mix and a 1.7% rise in concentrate sales.
Strong Earnings Estimate Revisions for KO Shares
Coca-Cola has an expected revenue and earnings growth rate of 0.6% and 6%, respectively, for the current year. The Zacks Consensus Estimate for the current year and next year has improved in the past 60 days.
Image Source: Zacks Investment Research
UnitedHealth Group Inc.
UnitedHealth Group’s top line is likely to maintain its momentum on the back of a strong market position, new deals, renewed agreements and expansion of service offerings. UNH’s solid health services segment provides diversification benefits. The Government business remains well-poised for growth in the future.
UNH’s adjusted net earnings per share are anticipated to be in the $27.5-$28.00 band in 2024. A sturdy balance sheet of UNH enables business investments and prudent deployment of capital via share repurchases and dividend payments.
Solid Earnings Estimate Revisions for UNH Shares
UnitedHealth Group has an expected revenue and earnings growth rate of 7.3% and 10.2%, respectively, for the current year. The Zacks Consensus Estimate for the next quarter, current year and next year has improved in the past 60 days.
Image Source: Zacks Investment Research
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
CocaCola Company (The) (KO) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
