Not all blue-chip companies are the same. Some are better positioned for the future, either through diversification, their competitive position or because they happen to operate in a sector that is on the cutting edge of where society is headed.
While most blue-chip companies are well-run and established businesses, not all of them will continue to be leaders in their respective industry 10 years from now. Many will be surpassed or replaced. Such is the nature of capitalism, which operates on principles of “survival of the fittest.”
So which of today’s leading blue-chip companies are likely to still be at the top of their game in 2030 and beyond? In this article, we examine seven of the best blue-chip stocks to buy and hold over the next decade.
- Apple (NASDAQ:APPL)
- Nike (NYSE:NKE)
- General Motors (NYSE:GM)
- Goldman Sachs (NYSE:GS)
- Amazon (NASDAQ:AMZN)
- Alibaba (NYSE:BABA)
- Nvidia (NASDAQ:NVDA)
Best Blue-Chip Stocks for the Next Decade: Apple (AAPL)
Apple isn’t going to get knocked off its perch atop the consumer electronics sector anytime soon. The Silicon Valley leader’s strength is its ability to diversify its business into new areas even as it retains a dominant market share in the legacy businesses in which it competes.
Now in its 12th generation, the iPhone remains the bestselling smartphone in the world even as Apple branches out into new areas such as TV and movie streaming, as well as online payments. The company’s long-gestating plans to develop an electric car are still in play, according to multiple media reports.
As long as Apple continues to expand into new areas it will remain a technology leader over the next decade and beyond. And that’s good news for Apple shareholders. Not that they haven’t been rewarded already.
Since the start of 2011, APPL stock has risen 1,017%. In the past 12-months, the share price is up an even 100%, having risen from $67.09 to $134.09. And the stock had a four-for-one stock split at the end of August 2020.
Anyway you look at it, Apple stock has delivered tremendous value to shareholders. With more to come.
Investors looking for an undervalued blue-chip stock to add to their portfolio need look no further than Nike. The sneaker and apparel company headquartered in Beaverton, Oregon remains a consumer powerhouse with revenue in 2020 of $37.4 billion.
The company remains the global leader when it comes to the sale of sneakers. Nike’s footwear sales last year totaled $23.3 billion, more than the other four major sports brands, including Adidas (OTCMARKETS:ADDYY) and Under Armour (NYSE:UA), combined. And Nike retains lucrative marketing deals with top professional athletes such as LeBron James, Cristiano Ronaldo and Rafael Nadal.
Despite the continued success, NKE stock has not kept pace with analysts’ expectations. At its current share price of $134.46, Nike stock is down 10% from its 52-week high of $147.95 reached in mid-January and woefully below the price targets of analysts.
Consider that the lowest price target on the stock of $140 is above the current share price and you can begin to appreciate that Nike is undervalued. The median price target on the stock is $165.00 a share, representing a potential upside of 23%. The high target on the stock is $189. Investors should see a buying opportunity.
General Motors (GM)
Investors needn’t wonder where General Motors will be 10 years from now. The Detroit automaker has provided a clear road map of where it plans to go over the coming decade. Hint: it involves electric vehicles.
GM is moving toward an all-electric future and plans to only sell electric vehicles by 2035, ending production of all vehicles that have diesel and gasoline-powered engines. The company has also announced a goal of being completely carbon neutral by 2040.
General Motors even re-branded itself earlier this year to reflect its electric future. The company’s focus seems to fit with the green direction that the U.S. government is taking under President Biden, as well as investors who have pushed GM stock up 47% so far this year to $58.71 a share. In the past year, the share price has risen 161%.
While General Motors has struggled in recent months with a global shortage of semiconductor microchips, that event is likely to be resolved in the short-term and shouldn’t obscure the fact that this company has a very bright future.
Goldman Sachs (GS)
New York investment bank Goldman Sachs does one thing: make money. And it pursues that goal with relentless determination. In good, bad and uncertain times, GS stock makes money and rewards its shareholders.
The company’s most recent earnings report underscored just how adept it is at turning a profit no matter the situation. Goldman Sachs obliterated analysts’ expectations with record first-quarter profits and revenues due to its roaring investment banking and trading businesses.
Goldman Sachs reported per-share earnings of $18.60, far above the $10.22 that had been expected by analysts. Revenue for the quarter came in at $17.7 billion, far above the $12.6 billion that analysts forecast.
An onslaught of special purpose acquisition company (SPAC) deals in the first quarter helped push Goldman Sachs’ investment banking net revenues to a record $3.77 billion. A push into consumer banking and cryptocurrencies, as well as growing activities in China and elsewhere in Asia should ensure that Goldman Sachs continues minting money over the next decade.
Does anyone think we’re going to stop shopping online after the pandemic? Neither does Amazon. The Seattle-based online retailer has permanently changed the way consumers purchase goods and services. While the Covid-19 pandemic helped to accelerate the switch to online shopping, there’s no reversing course at this point.
Looking out over the next decade, there’s no reason to think that Amazon won’t continue to dominate the online shopping experience.
Expanding its fulfilment centers, deploying delivery drones and growing its Amazon Web Services (AWS) cloud platform are just some of the ways in which Amazon is positioning itself for continued growth in the years ahead.
And while AMZN stock has performed well, up 43% over the past 12 months at near $3,400 a share, there are many analysts who see the stock as undervalued at current levels. At least one analyst has a $5,700 price target on Amazon stock and says it’s 70% undervalued at current levels. It’s certainly hard to bet against Amazon over the long-term.
Like it or not, China is an economic force in the world today and its influence is only going to grow in the next 10 years. China continues to produce innovative technology companies that are global leaders. And among the country’s tech leaders, Alibaba is the closest thing to a a blue-chip company.
The “Amazon of China,” Alibaba is a huge online retailer that is also extremely well diversified with operations ranging from online banking and cloud computing to artificial intelligence.
While Alibaba has endured a myriad of problems over the past six months, from having its planned spin-off of Ant Financial cancelled by Chinese regulators to CEO Jack Ma effectively being sent into exile, none of those issues have been directly related to the company’s business performance. And business is booming.
Despite the Covid-19 pandemic, Alibaba still managed to grow its revenue 30% in the fourth and final quarter of 2020. BABA stock looks cheap right now at $238 a share, down 25% from its 52-week high of $319.32.
If there’s one sector that can be expected to grow over the next 10 years, it’s semiconductors. The tiny microchips that power our computers, cell phones and video games are essential to our daily lives. The shortage of semiconductor microchips this year has reinforced this fact. And among semiconductor companies, Santa Clara, California-based Nvidia is king.
The company is one of the world’s largest chip makers and its graphics processing units power video games while its chip units support mobile computing and the automotive industry.
Nvidia is also big in artificial intelligence and about to get bigger once its $40 billion deal to acquire British semiconductor and software design company Arm Ltd. closes.
NVDA stock has climbed 40% in short order since March and is now trading just off its all-time high of $650. Intense demand for semiconductor chips that has been exacerbated by the current shortage has only increased investors’ appetite for Nvidia shares. This company will be producing strong products, revenues and investor returns for many years to come.
On the date of publication, Joel Baglole held long positions in AAPL, BABA and NVDA.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.