The S&P 500 has surged over 14% in 2019, driven by growth from tech giants such as Netflix NFLX, Facebook FB, and Amazon AMZN. With that said, no matter how long the current rally lasts, it is always a good idea to search for strong companies that look poised to run impressive businesses for years to come.
Today, we have highlighted three blue-chip stocks that look like buys at the moment.
1. Costco COST
This big-box grocery giant is coming off a better-than-expected Q2 fiscal 2019. COST stock has jumped 17% to start the year, but still rests below its 52-week high of $245.16 a share. Costco’s e-commerce strength has helped drive growth. In fact, digital comps surged over 25% last quarter, boosted by Costco’s free two-day delivery for non-perishable food and household supplies, along with expanded same-day through its Instacart partnership.
Costco also recently proved its e-commerce strength as rivals Kroger KR, Walmart, and Target TGT all roll out more digital offerings and delivery options. COST overtook Amazon’s spot as the number one internet retailer in terms of customer satisfaction in 2018, according to the American Customer Satisfaction Index. Looking ahead, Costco’s quarterly revenue is projected to jump 7.2% to reach $34.69 billion, based on our current Zacks Consensus Estimate. This would roughly match last quarter’s 7.3% top-line expansion.
Costco’s current full-year revenues are projected to jump 7.6%, with its adjusted fiscal 2019 earnings expected to surge nearly 16%. COST has also seen a ton of positive earnings estimate revision activity for 2019 and 2020, which helps it earn a Zacks Rank #2 (Buy). Costco looks poised for long-term success by proving its value proposition to customers, as roughly 90% of members reportedly renew their subscriptions. And the company is a dividend payer that boasts “B” grades for both Value and Growth in our Style Scores system.
2. Cisco Systems, Inc. CSCO
Shares of Cisco have doubled the Computer-Office Equipment Market’s 12% average climb over the last year, which helps CSCO stock rest right below its 52-week high of $54.23 per share. The firm recently raised its quarterly dividend to $0.35 per share, up from the $0.33 a share CSCO paid throughout 2018. In terms of its business, the historic networking and tech giant has expanded its internet of things division in recent years, offering clients the chance to connect everything from transportation fleets to assembly lines in order to run their operations more efficiently.
Cisco’s current quarter earnings are projected to climb 16.7% to hit $0.77 a share on the back of 3.4% revenue growth. Peeking a bit further ahead, the company is expected to see its full-year EPS figure surge nearly 18%, with revenues projected to climb 4.7% to $51.67 billion. CSCO has also experienced 12 positive earnings estimate revisions for both its current full year and the following year over the last 60 days, against zero downgrades.
This impressive earnings revision activity helps Cisco sport a Zacks Rank #2 (Buy) at the moment. CSCO also trades just below its industry’s average forward P/E at 18.5X forward 12-month Zacks Consensus EPS estimates. Going forward, Cisco’s ability to grow its IoT unit and further expand beyond its switches and routers should help its rally continue.
3. Walmart WMT
Walmart is coming off a stronger-than-projected fourth-quarter fiscal 2019. The retailer posted 40% full-year e-commerce growth and 3.6% full-year U.S. comps expansion, which highlighted its online grocery pickup business, digital initiatives, and other newer offerings. Walmart has raced into the future of retail through improved digital platforms, a massive store remodeling program, and more. Walmart projects that its e-commerce sales will climb around 35% as it adds 1,000 new grocery pickup locations in fiscal 2020 to end the year with 3,100 total. The company also expects to double its grocery delivery locations to 1,600.
The company’s earnings are projected to slip this year, weighed down by its Flipkart investment, which could prove vital as India’s economy grows and China’s slows. Meanwhile, our current Zacks Consensus Estimate calls for Walmart’s top-line to climb 2.7% this year to touch $528.21 billion, with fiscal 2021 revenues projected to come in 3.2% above our current-year estimate to reach $545.22 billion.
Walmart rocks a Zacks Rank #2 (Buy) based on fiscal 2020 and 2021 earnings revision strength. WMT also earns “B” grade for both Value and Growth in our Style Scores system. For instance, Walmart is trading at 20.7X forward 12-month Zacks Consensus EPS estimates, which represents a discount compared to its three-year high of 23.8X. And shares of WMT have climbed 45% over this stretch, to crush its industry’s 11% average climb. In the end, Walmart is one of the biggest companies in the world and is dividend payer that has raised its quarterly cash payout every year since first declaring one in March 1974.
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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
The Kroger Co. (KR) : Free Stock Analysis Report
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