In this piece, we will take a look at the 12 most profitable blue chip stocks to buy. If you want to skip our coverage of the latest stock market news, the outlook for 2024, and some recent and crucial developments, then you can skip ahead to 5 Most Profitable Blue Chip Stocks to Buy.
With the first month of 2024 coming to an end, the conflict in the Middle East appears to be a sore thumb in an otherwise roaring stock market and economic climate. While the Federal Reserve can take longer to reduce interest rates, as investors have likely understood during the past couple of weeks, the economy continues to grow and inflation is nowhere near the levels that were in play in late 2022. 2023 has seen a stock market compete with high interest and get some help from the economy along the way as global oil supply chains stabilized and prices at the pump dropped as a result.
However, the war in Palestine and the resulting destabilization in the Middle East threatens a vulnerable global economy that has finally started to find some footing after 2022's oil price shocks and high interest rates aimed at culling inflation. In the Middle East, three U.S. service members were killed and dozens were injured due to an unmanned drone attack on a base in northeast Jordan. With the political temperature already high domestically, and conflict rife in Gaza, Lebanon, and Ukraine, the U.S.'s response has everyone on the edge of their seats even though the attack took place on a weekend. The Federal Reserve is also a key body to watch as the year starts, as the tone set by its officials during their January announcements will dictate how well growth and high technology sectors can grow.
The start of the year is also the time for recollection, and for some investors, the time to adjust portfolios. The S&P 500 and the NASDAQ Composite gained 24% and 43% respectively last year, allowing the passive investor following index tracking funds a nice gain to cash out on as the year ended. Now, the question on everyone's mind is whether the markets will sustain their 2023 performance or become even bolder to set new highs.
Amidst these considerations, there are a multitude of stocks that an investor can choose from. The market is often divided across several categories and sectors, and one of these picks out stocks based on their market capitalization. A market cap sets the tone for a firm in the public's mind, as more valuable companies see both retail and professional investors place a higher premium on a firm's shares. This premium is mostly reflected through fortress income statements that reflect billions (if not hundreds or tens of billions) of dollars in revenue and substantial assets that assure investors that the ability of a company to remain a going concern is not threatened even during some of the most troubling economic environments.
On the flip side, other stocks such as small cap stocks often do well when the economy is growing since it provides them with the potential to expand operations and increase sales. Balancing a portfolio often requires subjective judgment, and in today's highly connected and fast paced world, a keen monitoring of local and global events to see whether markets as a whole will remain stable or not.
Today, we'll take a look at some of the most profitable blue chip stocks right now. Profit is an important indicator of a stock's financial health since it measures the money that is available for growth reinvesting, retained capital, or dividends if the company is a dividend paying stock. It also shows that financial managers have managed to manage debt and expenses to ensure investor payouts, and provides an analyst comfort that a firm should be able to handle any economic or market headwinds.
To make our list of the most profitable blue chip stocks, we used the former and current constituents of the Dow Jones Industrial Average (DJIA - or the Dow 30) and companies with a market cap greater than $100 billion. The 124 companies were ranked by their trailing twelve month net income.
For these most profitable blue chip stocks, we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
HSBC Holdings plc (NYSE:HSBC) is one of the oldest banks in the world. Headquartered in London, it provides services to customers all over the globe. The bank's trailing twelve month net income is $27.4 billion, and the bank was fined by British regulators in January 2024 as it failed to meet reporting requirements.
14 out of 910 hedge funds part of Insider Monkey's Q3 2023 database had bought and owned HSBC Holdings plc (NYSE:HSBC)'s shares. Jim Simons' Renaissance Technologies is the biggest shareholder courtesy of its $56 million investment.
Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Berkshire Hathaway Inc. (NYSE:BRK-A) are met by in our list of the most profitable blue chip stocks to buy.
11. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Trailing Twelve Month Net Income: $27.92 billion
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world's biggest contract chip manufacturing company. January 2024 was quite an important month for the firm as its shares popped following management optimism about A.I. chip demand at the fourth quarter of 2023 earnings call.
Insider Monkey took a look at 910 hedge fund portfolios for their third quarter of 2023 shareholdings to discover that 107 were the firm's investors. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)'s largest investor in our database is Ken Fisher's Fisher Asset Management as it owns $2.6 billion worth of shares.
Bank of America Corporation (NYSE:BAC) is one of the biggest banks in the U.S. January 2024 has been an interesting month, to say the least for its shares, as while Roth Capital downgraded them to Hold from Buy, Morgan Stanley soon followed with an upgrade to Overweight from Equal Weight.
As of September 2023 end, 88 out of the 910 hedge funds surveyed by Insider Monkey had held a stake in Bank of America Corporation (NYSE:BAC). The bank's biggest hedge fund shareholder is Warren Buffett's Berkshire Hathaway with a $28.2 billion stake.
Shell plc (NYSE:SHEL) is the Dutch oil mega giant. 2024 has started off on a strong note for the firm as it completed its divestment from operations in Nigeria - Africa's largest oil producer. This makes Shell plc (NYSE:SHEL) among a handful of Western companies that have left the country.
During last year's September quarter, 49 out of the 910 hedge funds profiled by Insider Monkey had invested in the company. Shell plc (NYSE:SHEL)'s largest stakeholder among these is Ken Fisher's Fisher Asset Management as it owns 22.3 million shares that are worth $1.4 billion.
Alphabet Inc. (NASDAQ:GOOG) is one of the biggest technology companies in the world and a global household name. Heading into the firm's upcoming earnings release, investors will be on the watchout for any impact that artificial intelligence has made on Alphabet Inc. (NASDAQ:GOOG)'s income statement.
Insider Monkey scoured through 910 hedge fund portfolios for 2023's third quarter to find that 163 were Alphabet Inc. (NASDAQ:GOOG)'s shareholders. Out of these, the biggest investor is Ken Fisher's Fisher Asset Management since it has invested $5.7 billion in the company.
Meta Platforms, Inc. (NASDAQ:META) is the second big tech firm on our list of the most profitable blue chip stocks. Like Alphabet, its shares are also rated Strong Buy on average, and the average analyst share price target is $360 - for a considerable downside.
For their September quarter of 2023 shareholdings, out of the 910 hedge funds part of Insider Monkey's database, 234 had invested in the social media company. Meta Platforms, Inc. (NASDAQ:META)'s largest investor is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital courtesy of its $3.4 billion stake.
Johnson & Johnson (NYSE:JNJ) is an American firm that makes and sells healthcare products that include medicines and other items. Despite its heft, close to three quarters of the shares are owned by institutional investors which can provide some great opportunities to make a profit due to massive price swings.
84 out of the 910 hedge funds profiled by Insider Monkey were Johnson & Johnson (NYSE:JNJ)'s shareholders. Ken Fisher's Fisher Asset Management was the biggest stakeholder as it owned $1.1 billion worth of stock.
Johnson & Johnson (NYSE:JNJ), Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Berkshire Hathaway Inc. (NYSE:BRK-A) are some highly profitable blue chip stocks.