In the stock market, investors often find themselves balancing the fine line between risk and reward. While the allure of quick profits can be tempting, it's essential to build a foundation of stable, long-term investments to ensure success. This balance is key to effective investing.
Instead of chasing high-risk, high-reward stocks that often dominate headlines, investors should carefully assess market dynamics and create a well-thought-out investment strategy. The focus should be on established companies with proven track records and the ability to withstand economic downturns.
For long-term stability and consistent growth, market experts recommend turning to blue-chip companies — highly reputable businesses with substantial market capitalizations. These industry leaders demonstrate financial resilience and a history of delivering strong returns to shareholders.
Blue-chip companies experience less volatility in stock prices, making them reliable choices for both experienced and novice investors. Additionally, for those seeking regular income, blue-chip companies often provide steady dividend payouts, further enhancing their stability.
These companies boast a combination of established market positions, strong brand recognition, loyal customer bases and extensive market reach. These attributes give them a distinct competitive advantage, making them favorites among investors and opening up new growth opportunities.
By investing in blue-chip stocks, investors can build a well-diversified portfolio. Here, we have identified four stocks from the Retail - Wholesale sector — Walmart Inc. WMT, Costco Wholesale Corporation COST, The Home Depot, Inc. HD and Lowe's Companies, Inc. LOW.
Past-Year Price Performance
Image Source: Zacks Investment Research
4 Prominent Picks
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 $559.9 billion as of Jul 15, 2024. This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 8.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 4.3% and 9.5%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of about 21 cents per share (83 cents annualized). WMT’s payout ratio is 36, with a five-year dividend growth rate of 2.3%. (Check WMT’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 $376.3 billion. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 2.3%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 5.2% and 10.3%, respectively, from the year-ago period’s actuals. The company pays out a quarterly dividend of $1.16 per share ($4.64 annualized). COST’s payout ratio is 29, with a five-year dividend growth rate of 12.6%.
Home Depot: Headquartered in Atlanta, GA, this company stands as another distinguished blue-chip stock, dominating the home improvement retail sector. Its consistent expansion in both Professional and Do-It-Yourself segments, fortified by an extensive product lineup and digital innovations, underpins its remarkable success. The company's interconnected retail strategy and robust technological infrastructure have amplified web traffic, leading to growth in digital sales. Moreover, as mortgage rates decline, it could potentially stimulate homebuying activity and subsequently drive demand for renovation and remodeling projects.
Home Depot has a market cap of $355.5 billion. This Zacks Rank #3 (Hold) stock has a trailing four-quarter earnings surprise of 2%, on average.
The Zacks Consensus Estimate for Home Depot’s current financial-year sales and EPS implies growth of 1.4% and 1.1%, respectively, from the year-ago period’s actuals. The company pays out a quarterly dividend of $2.25 ($9.00 annualized) per share. HD’s payout ratio is 60, with a five-year dividend growth rate of 11.5%.
Lowe's Companies: Lowe’s has demonstrated remarkable adaptability in responding to evolving consumer behaviors and market dynamics. The company has recalibrated its strategies to focus on smaller, non-discretionary projects and enhance value propositions for customers. Initiatives like MyLowe’s Rewards loyalty program and investments in omnichannel experiences underscore Lowe’s commitment to meeting evolving consumer needs and driving long-term growth. The Pro segment remains a significant growth driver for Lowe’s, with the company leveraging its multi-year strategy to enhance product offerings, fulfillment options and the overall shopping experience for professional customers.
Lowe's Companies has a market cap of $132.3 billion. This Zacks Rank #3 stock has a trailing four-quarter earnings surprise of 2.8%, on average. The company pays out a quarterly dividend of $1.15 per share. LOW’s payout ratio is 35, with a five-year dividend growth rate of 20.9%.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>Walmart Inc. (WMT) : Free Stock Analysis Report
Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : 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.
