You don’t always have to find small hidden gems to outperform the stock market. Buying shares of reliable corporations can help you outpace the stock market. Blue-chip stocks tend to be more persistent during market volatility and can limit your losses. These same stocks have great potential during bullish economic cycles.
Investors should look at a company’s profit margins, financial growth and business opportunities before investing in a stock. Those factors can set some corporations apart and reward long-term investors. If you’re looking for blue-chip behemoths with large market caps, you may want to consider these top picks.
Mastercard (MA)
Mastercard (NYSE:MA) is a reliable fintech company that will be around for many years as people continue to use their credit and debit cards. The company offers impressive profit margins and generates steady revenue and earnings growth.
Mastercard reported 13% year-over-year (YoY) revenue growth and 11% YoY net income growth in the fourth quarter of 2023. The company closed the quarter with a 42.62% net profit margin and a 39 P/E ratio.
The company also gives out a quarterly dividend. The yield is only 0.57%, but the growth rate is promising for long-term investors. Mastercard has maintained an annualized growth rate of 17.02% over the past five years. The firm’s low 19.28% dividend payout ratio indicates it has plenty of room to hike its dividend in future quarters. Mastercard has raised its dividend for 13 consecutive years.
Mastercard is currently rated as a Strong Buy among 29 analysts with a projected 12% upside. The highest price target of $549 per share suggests the stock can gain an additional 19% from current levels.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is one of the best tech stocks due to its success in multiple industries. Cloud computing is the main growth driver, achieving 24% YoY revenue growth in Q2 FY24. Microsoft Cloud generated $33.7 billion of the corporation’s $62.0 billion in the quarter. Overall revenue increased by 18% YoY, with gaming, LinkedIn, artificial intelligence and software as some of the key contributors.
Shares are up 237% over the past five years and trade at a 38 P/E ratio. The stock has a 0.73% dividend yield and has maintained a 10.86% dividend growth rate over the past decade. Microsoft has raised its dividend for 19 consecutive years and has a 25.12% dividend payout ratio. Long-term investors can generate high cash flow from this stock by the time they are ready to retire.
Analysts can’t get enough of this stock and have been rushing to assign higher price targets. It’s rated as a Strong Buy, with a projected 15% upside. The highest price target of $550 per share suggests an upside of roughly 33%. Even the lowest price target of $440 per share still infers some additional upside.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) runs one of the most successful online advertising platforms on the web. The company has made strides to improve its profit margins, which came in at 35.0% to close Q4 2023. Revenue increased by 25% YoY in that quarter, while net income surged by 201% YoY. Full-year revenue grew by 16% YoY, while full-year net income was up 69% over the same period.
The company has been growing across the board, with daily and active users on its platforms. Daily active users increased by 8% YoY across all platforms and 6% YoY on Facebook. Monthly active users reached 3.98 billion across all platforms, a 6% YoY improvement. The number of monthly active users on Facebook reached 3.07 billion, 3% higher than the same period last year.
The stock has more than doubled over the past year and analysts believe there is still some upside. Analysts rate it as a Strong Buy with a projected 9% upside. The highest price target of $600 per share indicates the stock can rally by an additional 20%.
On this date of publication, Marc Guberti held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.