When the game’s on the line, sometimes you need to call up your most experienced players, which segues into this discussion of blue-chip stocks to buy. Any sports fan realizes that age comes for every athlete, including the great Tom Brady. However, when the stakes run the highest, a certain confidence exists in putting the ball into the hands of veterans. So it is with blue chips.
Fundamentally, the top blue-chip stocks to buy underline high-quality enterprises. Specifically, investors can look at a company’s return on equity (ROE) relative to its industry standards. As Business Insider explains, a higher ROE “…signals that a company efficiently uses its shareholder’s equity to generate income.”
However, quality doesn’t mean much if the targeted security has little chance to move higher. Therefore, I’ve taken the time to source only enterprises that feature double-digit upside potential, per Wall Street analysts. So, without further ado, below are blue-chip stocks to buy for quality-focused investors.
ROP | Roper Technologies | $429.05 |
EC | Ecopetrol | $11.64 |
DD | DuPont | $72.75 |
STLA | Stellantis | $18.66 |
UMC | United Microelectronics | $8.28 |
EMR | Emerson Electric | $87.28 |
SNY | Sanofi | $47.71 |
Roper Technologies (ROP)
An industrial giant, Roper Technologies (NYSE:ROP) produces engineered products for global niche markets. Per its public profile, the company services customers in over 100 countries. Presently, Roper commands a market capitalization of $45.7 billion. Since the Jan. opener, ROP dipped by 1%. In the past 365 days, it’s down a bit over 5%.
Nevertheless, contrarian investors of blue-chip stocks to buy should take a closer look at Roper. For one thing, the market prices ROP at a trailing multiple of 10.1. As a discount to earnings, the company ranks better than 88.44% of the competition. In addition, it features a decently stable balance sheet with an Altman Z-Score of 3.55, indicating low bankruptcy risk. Regarding the main topic of this article, Roper features an ROE of 33.06%. This stat outpaces over 93% of its peers. Finally, Wall Street analysts peg ROP as a consensus moderate buy. Further, their average price target stands at $487.20, implying over 13% upside potential.
Ecopetrol (EC)
A hydrocarbon energy specialist, Ecopetrol (NYSE:EC) represents the largest and primary petroleum company in Colombia. Fundamentally, Ecopetrol may gain as crude prices rise, primarily due to China’s economic reopening. Currently, the company commands a market cap of $23.42 billion. Since the January opener, EC gained over 15% of its equity value.
Financially, it might not be terribly surprising to see EC rise above other blue-chip stocks to buy. For one thing, the market prices EC at a trailing multiple of 3.08. As a discount to earnings, Ecopetrol ranks better than 79.58% of its peers. Also, the company enjoys a three-year book growth rate of 18.7%, above 73.73% of the industry. Regarding quality, Ecopetrol’s ROE stands at 42.32%. This stat ranks above 85.38% of the oil and gas industry. Turning to Wall Street, analysts peg EC as a consensus moderate buy. Moreover, their average price target stands at $13.13, implying nearly 15% upside potential.
DuPont (DD)
A multinational chemical firm, DuPont (NYSE:DD) specializes in applied sciences to facilitate solutions for various industrial applications. Presently, the company carries a market cap of $34.21 billion. Since the January opener, DuPont gained over 8% of its equity value. For the trailing year, shares barely poked their head above parity. Still, investors should give this opportunity a deeper dive as it could be one of the best blue-chip stocks to buy. Currently, the market prices DD at a trailing multiple of 6.26. As a discount to earnings, DuPont ranks better than 88.43% of sector players.
Also, its three-year free cash flow (FCF) growth rate pings at 42.9%, above 82% of the industry. Regarding quality, DuPont’s ROE is 22.64%, outpacing 83.71% of the field. Also, its return on asset (ROA) is 13.28%, beating out 84.63% of rivals. Looking to the Street, covering analysts peg DD as a consensus moderate buy. As well, their average price target stands at $86.17, implying over 15% upside potential.
Stellantis (STLA)
A global automaker, Stellantis (NYSE:STLA) has been on a roll lately. Recently, the company has been aggressively investing in the electrification of mobility. Better yet, the results are evident in the charts. Since the Jan. opener, STLA gained a whopping 29% of equity value. In the past 365 days, it’s up over 25%.
Despite the robust enthusiasm, STLA could still enjoy upward momentum. Therefore, it deserves close attention among blue-chip stocks to buy. Specifically, the market prices STLA at a forward multiple of 4.16. As a discount to earnings, Stellantis ranks better than 96% of its peers. Also, the company enjoys a three-year EBITDA growth rate of 32.2%. In terms of quality, Stellantis printed an ROE of 25.59%. This metric rates above 91% of the auto industry. As well, its ROA pings at 9.13%, above 85% of sector rivals. Lastly, Wall Street analysts peg STLA as a consensus strong buy. Their average price target stands at $22.07, implying over 17% upside potential.
United Microelectronics (UMC)
Based in Taiwan, United Microelectronics (NYSE:UMC) is a semiconductor specialist. Notably, United’s technologies support applications in smartphones, virtual reality, and 5G infrastructure, among others. Currently, the company carries a market cap of $21 billion. Since the Jan. opener, UMC got off to a blistering start, gaining nearly 28%. However, it’s down almost 9% during the trailing year.
Nevertheless, UMC could make for an enticing case among blue-chip stocks to buy. In particular, the market prices UMC at a forward multiple of 11.28. As a discount to earnings, the semiconductor firm ranks better than 86.62% of the field. As well, the company enjoys solid revenue growth and excellent profit margins. Per the quality equation, United’s ROE stands at 28%. This stat ranks above 88% of the industry. Also, its ROA hit 16.7%, above 87% of its peers. Lastly, Wall Street analysts peg UMC as a consensus moderate buy. Further, their average price target stands at $9.90, implying over 17% upside potential.
Emerson Electric (EMR)
A multinational firm headquartered in Missouri, Emerson Electric (NYSE:EMR) manufactures products and provides engineering services for industrial, commercial, and consumer markets. At the moment, the company carries a market cap of nearly $49 billion. Since the start of the year, EMR slipped 11%. For the past 365 days, shares dipped almost 7%.
While not immediately confidence-inspiring, EMR could be one of the blue-chip stocks to buy for contrarian investors. For one thing, it presents an interesting value proposition. Right now, the market prices EMR at a trailing multiple of 10.86. As a discount to earnings, Emerson ranks better than 77.75% of the underlying sector. Moreover, its three-year book growth rate stands at 9.2%, better than 63.26% of its peers. For quality, Emerson’s ROE stands at 44.67% while its ROA comes in at 14.1%. Both stats rank better than at least 93% of the industrial products sector. Looking to the Street, analysts peg UMC as a consensus moderate buy. Their average price target is $101.57, implying nearly 19% upside potential.
Sanofi (SNY)
A healthcare giant, Sanofi (NASDAQ:SNY) engages in the research and development, manufacturing and marketing of pharmacological products, principally in the prescription market. As well, the company develops over-the-counter medications. Currently, Sanofi commands a market cap of $120.3 billion. Since the beginning of the year, SNY dipped 2.5%. In the trailing year, it’s down 1.5%.
Still, investors may use this opportunity to acquire one of the top blue-chip stocks to buy on the cheap. Right now, the market prices SNY at a trailing multiple of 10.68. As a discount to earnings, Sanofi ranks better than 71.4% of the competition. Also, shares trade at a forward multiple of 10.68. Here, this stat rates conspicuously below the sector median of 15.93.
For quality, Sanofi’s ROE pings at 11.71%, above 73.2% of its peers. Also, its ROA hit 6.81%, beating out 74.5% of its rivals. Lastly, Wall Street analysts peg SNY as a consensus moderate buy. Their average price target stands at $65, implying over 36% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.