Blue-chip companies are stable industry leaders with solid financials and robust cash flows. They are known for their attractive returns, impressive growth records, and growing dividends.
The stock market has been nervy lately due to growing worries around interest rate hikes and ongoing geopolitical conflict. Increased market volatility is evident in the CBOE Volatility Index’s 90.6% rise year-to-date and 64.9% increase over the past three months. The current market condition has triggered sharp selloffs in growth stocks. But blue-chip companies tend to perform well during economic turmoil, given their substantial cash balances to weather such market swings.
Given the backdrop, Wall Street analysts expect quality blue-chip stocks Alphabet Inc. (GOOGL), Amazon.com, Inc. (AMZN), and Visa Inc. (V) to surge in the coming months.
Alphabet Inc. (GOOGL)
Mountain View, Calif.-based GOOGL offers internet-related services and products in the U.S., Europe, Canada, Latin America, the Middle East, and Asia-Pacific. The company operates through three segments: Google Services; Google Cloud; and Other Bets. GOOGL provides technology and internet products and services, cloud-based collaboration tools, licensing, research, and development services.
On Dec.20, 2021, GOOGL renewed a multi-year commercial agreement on similar terms with Opera Limited (OPRA) to distribute Google Search in Opera browsers. The renewal of this search agreement is expected to boost the company’s profitability.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, GOOGL's revenues increased 32.4% year-over-year to $75.33 billion. Its operating income grew 39.8% year-over-year to $21.89 billion. The company's net income rose 35.6% from the year-ago value to $20.64 billion, and its earnings per share increased 37.6% from its year-ago value to $30.69.
The $67.94 billion consensus revenue estimate for its fiscal year 2022 first quarter, ending March 31, 2022, represents 22.8% year-over-year growth. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of all the trailing four quarters.
GOOGL stock has gained 24.6% over the past year and closed yesterday’s trading session at $2,542.09.
Each of the 30 Wall Street analysts that rated GOOGL rated it Buy. And the 12-month median price target of $3,499.00 indicates a 37.6% potential upside. The price targets range from a low of $3,000.00 to a high of $3,900.00.
Amazon.com, Inc. (AMZN)
AMZN in Seattle, Wash., is engaged in the retail sale of consumer products and subscriptions in North America and internationally. The company operates in three segments: North America; International; and Amazon Web Services (AWS). AMZN sells electronic devices, merchandise, and content purchased from third-party sellers through physical and online stores. It offers programs to allow sellers to sell their products on its websites and stores.
This January, AMZN and Telefónica, SA (TEF) expanded their strategic collaboration for cloud development and the digital home. The collaboration should open new opportunities in 5G, IoT, edge computing, machine learning, Industry 4.0, and video and game streaming. The agreement is expected to boost the company’s customer base and revenue streams.
AMZN's total net sales increased 9.4% year-over-year to $137.41 billion in its fiscal 2021 fourth quarter, ended Dec. 31, 2021. AMZN's income before income taxes rose 92.3% year-over-year to $14.93 billion. The company’s net income increased 98.3% from its year-ago value to $14.32 billion. AMZN's earnings per share grew 96.9% year-over-year to 27.75.
Analysts expect AMZN's revenue for its fiscal year 2022 first quarter, ending March 2022 to come in at $116.34 billion, representing a 7.2% year-over-year rise. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
AMZN slumped 18.4% year-to-date. However, the 12-month median price target of $4,218.56 indicates a 55.1% potential upside from yesterday’s closing price of $2,720.29. Each of the 34 Wall Street analysts that rated AMZN rated it Buy. The price targets range from a low of $3,600.00 to a high of $5,000.00.
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Visa Inc. (V)
V in Foster City, Calif., is a leading payments technology company. It facilitates digital payments among consumers, financial institutions, merchants, businesses, strategic partners, and government entities worldwide. V provides card products, platforms, and value-added services. It offers the services under Visa, Visa Electron, Interlink, VPAY, and PLUS brands.
Last December, Visa Canada introduced a new offering with CIBC and Simplii Financial to allow consumer and business customers to move money quickly. The collaboration might boost V’s business growth and revenues.
In its fiscal 2022 first quarter, ended Dec. 31, 2021, V's net revenues increased 24% year-over-year to $7.06 billion. Its operating income increased 28% year-over-year to $4.94 billion. The company's net income rose 25% from the prior-year period to $3.90 billion. And V’s earnings per share increased 27% from the year-ago value to $1.81.
The $6.86 billion consensus revenue estimate for its fiscal year 2022 second quarter, ending March 31, 2022, represents 19.7% year-over-year growth from the same period in 2021. The $1.66 consensus EPS estimate for the current quarter represents 20.1% year-over-year growth from the same period last year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of all the trailing four quarters.
Over the past year, V shares have declined 13% in price. However, the 12-month median price target of $273.47 indicates a 42.7% potential upside from yesterday’s closing price of $191.71. And among the 19 Wall Street analysts that rated V, 16 rated it Buy, while three rated it Hold. The price targets range from a low of $210.00 to a high of $312.00.
GOOGL shares were trading at $2,656.59 per share on Wednesday afternoon, up $114.50 (+4.50%). Year-to-date, GOOGL has declined -8.30%, versus a -10.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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