Blue-chip companies are typically industry leaders with strong financials and cash balances, which affords their stock some stability even during an economic downturn. Such businesses have pricing power and are considered safe investment bets amid market volatility. Last month…
the major market indexes suffered wild price swings, which resulted in the Dow Jones Industrial Average (DJIA) slipping 3.3% in January. The S&P 500 and the Nasdaq 100 fell 5.3% and 8.9%, respectively, marking their worst monthly performance since March 2020. The volatility in January was due largely to the Fed’s decision to increase interest rates multiple times this year and rising geopolitical tensions. According to BofA Securities’ U.S. head of equity and quantitative research, Savita Subramanian, “It’s going to be a year where we are shocked by the volatility.” But blue-chip companies have a long track record of providing attractive returns and a regular flow of income in the form of dividends.
Given this backdrop, we think it could be wise to add blue-chip stocks The Walt Disney Company (DIS – Get Rating) and The Boeing Company (BA – Get Rating) to one’s watchlist. Wall Street analysts expect these stocks to rally more than 20% in price the near term.
The Walt Disney Company (DIS – Get Rating)
Famous entertainment company, DIS, which is headquartered in Burbank, Calif., operates through four segments: media networks; parks, experiences, and products; studio entertainment; and Direct-to-consumer and international. It engages in film and episodic television content production and distribution and operates television broadcast networks under the ABC, Disney, and ESPN brands.
On Nov.24, 2021, DIS announced in its annual report that it plans to increase its overall spending on content to $33 billion for its fiscal year 2022, which is almost $8 billion more than what DIS spent in fiscal 2021. It intends to spend more on expanding its reach by streaming through its platforms Disney Plus, Hulu, and ESPN Plus.
DIS’ revenues increased 26% year-over-year to $18.53 billion for its fourth fiscal quarter, ended Oct. 2, 2021. The company’s cash provided by continuing operations increased 58% year-over-year to $2.63 billion. Also, its free cash flow increased 62% year-over-year to $1.52 billion. In addition, its non-GAAP EPS came in at $0.37, compared to a $0.20 loss.
Analysts expect DIS’ EPS and revenue for its fiscal 2022 to increase 89.1% and 25.3%, respectively, year-over-year to $3.82 and $74.36 billion, respectively. Over the past nine months, the stock has declined 22.3% in price to close the last trading session at $144.49. However, Wall Street analysts expect the stock to hit $194.05 in the near term, indicating a potential 34.3% upside.
The Boeing Company (BA – Get Rating)
BA is a Chicago-based aerospace company that designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide. The company operates through the Commercial Airplanes, Defense, Space and Security, Global Services, and Boeing Capital segments.
On Jan. 21, 2022, BA announced that it had signed an agreement with the Ministry of Defense (MOD) to provide long-term training, support, and…
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