The U.S. stock market may be riding near record highs, but that doesn’t mean that there aren’t still some good opportunities to buy.
In fact, as explored in a new blog post from Morningstar senior editor Margaret Giles, parts of the market appear to be undervalued — particularly some of the “blue-chip” stocks that make up the core of many investors’ retirement portfolios.
As Giles explains, blue-chip stocks are from companies that are large, well-established and financially sound.
“These companies have strong brand names and reputations, and they generate dependable earnings,” Giles notes. “Blue-chip companies usually boast consistent dividends and are often considered less risky, given their financial stability.”
Despite their appeal, investors still differ in how they define blue-chip companies. Some investors demand that a blue-chip stock be included in a particular index, Giles observes, such as the Dow Jones Industrial Average. Others may include only dividend-paying companies on their lists of blue-chip stocks.
“Still others may have specific market-cap thresholds for blue-chip companies,” Giles says.
Morningstar’s list of blue-chip stocks includes companies with market caps that top $100 billion. The companies on the list also have wide (i.e., positive) Morningstar Economic Moat Ratings and predictable cash flows, and they are run by management teams that make “smart” capital-allocation decisions.
See the accompanying slideshow for the 10 best blue-chip stocks to buy for the long term, according to Morningstar.
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