The American blue-chip stocks are fine additions to any diversified portfolio aimed at betting on value
Don’t feel the need to jump into the crowded technology plays just because you’re worried about being left behind, as most others around you cash in on high-tech themes such as generative artificial intelligence or augmented reality. There are more than one or two ways to make money in the market, after all! One of those ways is via blue-chip stocks.
While such emerging technologies will create generational wealth-building opportunities, loading up on the hot stock of the day could lose you money if you don’t get a good price. At these levels, it’s unclear if you’re buying close to a local peak or if we still have miles’ worth of gains over the coming months or even years.
Chasing anything in the stock market (whether it be dividend yield or share price momentum) is never a good idea unless you’re willing to ride the inevitable dips and think a stock is, in fact, not as expensive as it seems.
For now, I understand why some investors would rather stick with steady blue chips than chase Super Micro Computer (NASDAQ:SMCI) stock at these heights and risk losing sleep over the trajectory to come.
So here are three blue-chip stocks to consider for investors.
Walt Disney (DIS)
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There’s been so much drama at the board of Walt Disney (NYSE:DIS) of late, with a proxy battle unfolding and activist investor Nelson Peltz pushing for positive change. Despite the haze of uncertainty facing the media giant, investors seem to be happy to pick up the stock in recent months.
Part of the reason, I believe, is Disney stock’s historically depressed price tag. However, the even bigger reason for optimism may lie in the potential for huge upper-level management changes that could help accelerate the company’s turnaround plans.
Sure, Disney has been already trying to turn the ship around with CEO Bob Iger as its captain. However, the waters have been incredibly rough, arguably too rough to get things moving quickly enough without some outside help. Perhaps an outsider like Peltz and his people is needed to give Disney the agility it needs to march higher again. This makes it one of those blue-chip stocks to consider.
Undoubtedly, significant board changes may act as the catalyst DIS stock needs to gain higher again after nine long years of sideways action (the stock actually was a choppy ride in that period). After blasting off more than 50% of last year’s lows, I’m inclined to stick around as any big change for Disney, I believe, is bound to be a positive change.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, GOOGL) stock has been experiencing some wild swings since peaking in the back half of January 2024. Undoubtedly, the first year of Gemini has been quite a mess. But that doesn’t change the fact that Alphabet has some of the best AI researchers on Earth.
Most of the best AI innovations may still be hidden from the public. As Alphabet strives to balance capability and safety, I believe it will be difficult for the market to keep dragging GOOG stock sideways (or lower) for too long a time period, especially at today’s very reasonable 26.1 times trailing price-to-earnings (P/E).
Google Search’s best days may be in the past (or are they?), but arguably, Alphabet, the AI company, ought to be valued more than Alphabet, the search company, at least in my opinion.
Either way, an eroding of Google Search’s dominance will at least get some anti-trust regulators off the company’s back as it looks to explore new industries to augment or disrupt (from journalism to healthcare) with the power of AI in its hands.
American Express (AXP)
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Finally, we have American Express (NYSE:AXP), a credit card company that Warren Buffett seems comfortable owning for decades at a time. The stock recently surged to new highs of around $225 per share, thanks in part to some impressive quarters (and upbeat guidance). With a powerful brand and many loyal, affluent customers by its side, American Express has a unique opportunity to bring them further into the new digital age.
American Express’s “Plan It” payment option is more convenient for cardholders than some of the alternative Buy Now Pay Later (BNPL) services that have emerged in recent years.
Why bother signing up for another service when it’s all too easy to get a payment plan going with just a few clicks through American Express’ impressive app?
Looking ahead, I expect American Express to continue adding new features to its app. Young people, like Millennials, want a seamless digital experience, and the company has given them just that. In the next decade, look for American Express to tap into AI to fight fraud and help it take the personalization factor to the next level. All in all, it’s one of those blue-chip stocks to buy.
With such a rich trove of customer data, I expect American Express to be a force in the age of AI and the data cloud.
On the date of publication, Joey Frenette held shares of Alphabet (Class C), Disney, and American Express. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.
Blue-Chip Stocks
