Most readers will be aware of the virtues blue-chip stocks possess:
They’re large, well-established companies with a financially sound business that lends great credibility to their equity in general. These companies are household names with track records of steady growth and operational profitability in some cases over decades. They’ve weathered economic cyclicality and the recessions that come with it, making them particularly timely.
We’re exploring those blue-chip stocks that beat the market in 2023. I define that as providing better returns than the average of the 7.35% return from the S&P 500 year-to-date and the 1.05% return from the Dow Jones Industrial Average. So, we’re talking about shares that exceeded 4.2% returns in 2023, also listed here.
Blue-Chip Stocks: American Express (AXP)
American Express (NYSE:AXP) is well-known for providing credit cards catering to more affluent customers. Those same affluent customers tend to be less affected by economic downturns. In turn, it’s logical to guess that the company stands to do better in the difficult environment this year. So far, that has been the case.
American Express had a very strong 2022, during which it reached its goal of delivering 25% revenue growth. It did exactly that, reaching $52.86 billion in sales on payments volume that increased by a slightly smaller 21%.
The company’s strategy focuses on acquiring more customers and growing that base. American Express established 12.5 million new card accounts in 2022. Investors should expect companywide EPS to increase by 15-17% in 2023. The company has rewarded investors for the strong year by planning to increase its dividend by 15%. American Express’s stable business and customer base give it advantages in this environment, suggesting continued strength.
Boeing (NYSE:BA) is moving into a new chapter as sales ramp up and problems of the recent past fade. A strong sales trajectory and a backlog of business suggest that Boeing is back. That said, Boeing continues to have operational difficulties that resulted in net losses overall in 2022, a continuation of 2021 results.
Boeing’s 2022 sales increased by 7% to $66.61 billion. Boeing suffered a net loss again in 2022 but posted a positive operating cash flow of $3.5 billion, largely due to Q4 results. That led to positive cash flows during the year.
BA stock is trending upward in 2023 because the business is now headed in the right direction after major setbacks. Boeing delivered 480 commercial planes and recorded 808 orders overall. With supply chains returning to normal, Boeing should be able to better fulfill that backlog, including a large order of its 787 Dreamliners to Saudi carriers. Thus, it is among the top blue-chip stocks.
Disney (NYSE:DIS) continues to grow at an impressive rate, especially for a firm of its size. Meanwhile, the company is undertaking efforts to reorganize to increase efficiency. Let’s focus on those two aspects of its story to understand why it does well even in a challenging economy.
Disney’s fiscal year’s first quarter ends on Dec. 31, which, for most other firms, is the end of the fiscal year. Despite the slight difference, Disney moved into the new year with strong momentum on an 8% increase in sales. That solid growth increased EPS from $0.63 to $0.70 in Q1 year-over-year.
Meanwhile, Disney is reorganizing for efficiency as the economy tightens. Structurally, the company has realigned its three core businesses, Entertainment, ESPN, Parks, Products, and Experiences, to be headed separately. The company believes the reorganization will reduce inefficiency leading to $5.5 billion in savings.
Let’s face it, current headlines about McDonald’s (NYSE:MCD) expose the brutal truth of business. Even when business and stock are strong, restructuring will continue to occur. Like Disney, another thriving business, McDonald’s is restructuring and conducting layoffs.
McDonald’s began a round of layoffs beginning April 3, targeting hundreds of corporate employees. I can’t speak to their individual performance. They may indeed be less productive. But McDonald’s grew by 12% in Q4 with double-digit growth across all segments. During 2022, company-wide sales increased by 10%. Business is business, but there’s a human toll exacted that broad metrics simply can’t account for.
The result of current layoffs is likely to be a boon to MCD stock from the perspective of the markets. It’ll be viewed as leaner and ready for the next growth cycle. McDonald’s has also continued to focus on affordability and a pared-down menu which are arguably strengths currently.
Readers are likely aware that Walmart (NYSE:WMT) is the world’s largest retailer. But the facts about its massive scale provide a bit more perspective for us to understand its relevance. Let’s look at some of those statistics.
The world’s largest retailer tallied $572.75 billion in worldwide revenues in 2022 from its 10,953 locations, 4,650 of which are U.S. located. That means that 140 million customers visit Walmart every week.
The company has become the largest grocery store in the U.S. as well. That’s probably not surprising to those of you who have visited recently: The grocery section dominates the store. However, what is interesting – at least to me – is that Walmart became the largest U.S. grocer back in 2001.
I’m trying to make a simple point: Walmart continues to dominate in 2023 with low-price offerings, especially on staple items. That is a strong reason that its stock continues to perform well.
General Electric (GE)
The past is not a prologue. And that’s a positive for General Electric (NYSE:GE) stock which has provided negative annual returns over the last decade. The company had long been in a slow decline, and following years of declining revenues, it was dropped from the DJIA in 2018 as the last original component. 2023 has started very differently for the firm as it outperforms the market.
The reason for the strong performance has to do with overarching trends and a military build-up. The firm’s new XA100 military jet engine is shrouded in mystery. Few outside the military have seen the engine, and those that recently did were allowed no recording devices in the room where it was displayed.
GE hopes the engines will be fitted to sixth-generation fighter jets used by the U.S. and its allies. Rising tension in the Pacific ensures GE will continue to receive serious attention for the next few years at least. Thus, it is one of the top blue-chip stocks in my book.
Exxon Mobil (XOM)
2022 was an exceptionally strong year for Exxon Mobil (NYSE:XOM) as favorable market prices resulted in $55.74 billion in earnings. That was more than double the earnings Exxon Mobil reported a year earlier.
But it’s difficult to maintain strength and grow quarter after quarter. Like all big oil firms, Exxon Mobil rewards investors willing to experience that volatility with revenues and share buybacks. Its dividend is extremely safe, having last been reduced in 1983. In any case, the point here is that Exxon Mobil, as a company, is adept at manipulating its share price to remain smooth despite volatile commodity markets.
So, it does well even when the price of Brent crude trends is lower. However, it might not have to worry as much now about playing defensively. OPEC+ cut production, which suggests that per barrel prices should rise as firms scramble to fill the supply gap. That’s a positive catalyst for XOM stock which has done well over the last three years despite the tumult.
On the date of publication, Alex Sirois 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.
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