3 Blue-Chip Stocks to Buy and Hold for a Lifetime of Profits

Stocks to buy

Pursuing long-term prosperity often leads one to investigate blue-chip stocks, which are industry leaders in stability, resiliency, and potential for long-term growth. Indeed, there are three major opportunities in this field. With its strategic focus on capacity expansion and technological progress, the first one may capitalize on emerging market opportunities. Moreover, its leadership in extreme ultraviolet (EUV) systems shows its technological superiority and revenue resilience.

Conversely, the second is a shining example of sound financial management and effective operations. As a cornerstone investment in the semiconductor sector, the company’s dedication to shareholder returns and its planned worldwide manufacturing development strategy strengthen its reputation. It also boasts numerical solid measures, such as a gross margin and a great return on equity (ROE).

Lastly, the third company is leveraging AI to revolutionize user experiences and boost income through targeted advertising. Its leadership in interactive media and service monetization possibilities is driven by AI-powered recommendation systems that significantly enhance ad interaction. These companies are embracing fundamentals that have the potential to shape the industry for decades to come.

ASML (ASML)

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ASML (NASDAQ:ASML) focuses on strategic investments in capacity ramp and technological innovation. This is to edge on the upcoming market shifts (like AI chips). Notably, H2 2024 will be better, continuing the upward trend of the semiconductor sector. Furthermore, secular market trends and rising demand for advanced semiconductor nodes continue to support ASML’s positive growth forecast.

Additionally, the EUV systems of ASML are essential to its ability to generate income. The business supplied 12 EUV systems in Q1 2024, bringing in EUR 1.8 billion in revenue. Furthermore, the order book shows net system bookings of EUR 3.6 billion during the same time, showing consistent demand. The industry’s transition to more sophisticated semiconductor production techniques and ASML’s technological capabilities are demonstrated by the growing deployment of EUV systems. Because of their higher capabilities, EUV systems fetch premium pricing, considerably boosting ASML’s revenue and profit margins.

Lastly, the company’s strong bottom line exceeded projections in Q1 2024, with a gross margin of 51%. Operational efficiency and a good product mix are credited for this profit growth. Thus, the business made EUR 1.2 billion in net profits or 23.1% of total net sales.

TSMC (TSM)

Source: Piotr Swat / Shutterstock.com

Q1 2024 saw an improvement in TSMC’s (NYSE:TSMgross margin to 53.1% and operating margin to 42%. Further, ROE hit 25.4%, while EPS was at TWD8.7. TSMC has a competitive lead and sharp cost management, indicating solid margins and smooth operations. Fundamentally, a high ROE suggests that the company may make significant profits.

Moreover, by making large expenditures in fabrication facilities located in Arizona, Japan, and Europe, TSMC is proactively growing its manufacturing footprint. Notably, 2024’s capital budget may fall between $28 billion and $32 billion. By diversifying its manufacturing sites and utilizing its global flexibility, TSMC hopes to reduce geopolitical risks. It will also improve responsiveness to customer demands and seize new growth possibilities. This development strengthens the company’s lead in semiconductors and aligns with its long-term growth plan.

Finally, TSMC’s cash from operations in Q1 was TWD436 billion. TWD181 billion was spent on capital expenditures, with sophisticated process technologies receiving a sizable share. Therefore, the corporation can finance significant technological development and expansion expenditures because of its solid cash-generation capabilities. 

Meta (META)

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Meta (NASDAQ:META) uses AI to improve the user experience and increase revenue. The business delivers more relevant advertising using AI-driven recommendation algorithms, which raises ad engagement and revenue. AI is recommended for over 50% of Instagram content and almost 30% of Facebook feed posts, demonstrating its increasing impact on content discovery and consumption.

Additionally, Meta has a long-term top-line lead, reflected in solid revenue growth, effective cost control, and strong cash flow production. The company generated $36.5 billion in total sales in Q1 2024, a 27% rise from Q1 2023. Further, the revenue composition holds a diversified sales mix, with logic accounting for 63% and memory accounting for 37% of net system sales. Despite rising costs, Meta has a healthy financial position with $58.1 billion in cash and an operating margin of 38%.

Lastly, Advantage+ shopping and Advantage+ app campaigns—which have seen a huge increase in income, more than tripling from the previous year—are among the AI-powered solutions that Meta Platforms offers. Therefore, automating campaign preparation and enhancing ad effectiveness, these technologies help advertisers increase their clients’ return on ad spend (ROAS).

As of this writing, Yiannis Zourmpanos held long positions in ASML, TSM and META. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Yiannis Zourmpanos is the founder of Yiazou Capital Research, a stock-market research platform designed to elevate the due diligence process through in-depth business analysis.

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