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7 Blue-Chip Stocks that Could Take the Market Higher in 2020

7 Blue-Chip Stocks that Could Take the Market HigherPosted on Friday, February 8th, 2019 by Chris Markoch

During times of market volatility, blue-chip stocks give investors the benefits of growth and the security of income. Although the definition of a blue-chip stock may vary depending on the qualities individual investors look for, there is a consensus that all blue-chip stocks share three characteristics. First, they are well-known companies to the general public as well as to investors. They typically are associated with popular “brand name” products. Second, they have solid balance sheets that give them the ability to perform well in good and not-so-good economic conditions. The financial stability of these stocks is also typically reflected in regular dividend payments to shareholders. The third characteristic is that they are established companies that are rewarded for this by being listed on the major market indexes.

That combination can give your portfolio the opportunity with reward while minimizing your risk in a year like 2019 where the economy, at the very least, is facing a very mature economic growth cycle. With a budget battle still far from settled, ongoing trade tensions with China, and the unnerving potential for further interest rate hikes.

An additional benefit to blue-chip stocks is that they can be found in virtually any sector. So investors don’t have to sacrifice the potential growth of technology stocks when investing in blue-chip stocks. In this report, we’ve put together a list of 7 blue-chip stocks that are strong on their own merits but should also help to give the broader market a boost.

#1 - Deere & Co. (NYSE:DE)

Deere & Company logo

Deere & Co. (NYSE: DE) - A year ago, analysts were sour on Deere's prospects. After all, the farm machinery manufacturer was expected to be one of the higher profile victims of the tariff dispute between the United States and China. Deere was expected to suffer on both sides of the trade war. Not only would their raw materials cost increase, but they looked to lose sales to China. But, at least for now, those concerns seem to be overstated. In their most recent earnings report, they posted earnings per share (EPS) of $2.59 that missed expectations but was higher than the number in the prior twelve-month period ($1.97). And the company also posted a 36% increase in net equipment sales. Going forward the company is projecting modest sales growth (7% in 2019; 4% in 2020) that should set them up for a 22% increase in profits in 2019 and a 12% profit bump in 2020. Among other blue-chip stocks, Deere has a small dividend yield of 1.8%.

About Deere & Company
Deere & Company manufactures and distributes various equipment worldwide. The company operates through three segments: Agriculture and Turf, Construction and Forestry, and Financial Services. The Agriculture and Turf segment offers agriculture and turf equipment, and related parts, including large, medium, and utility tractors; tractor loaders; combines, cotton pickers, cotton strippers, and sugarcane harvesters; harvesting front-end equipment; sugarcane loaders and pull-behind scrapers; and tillage, seeding, and application equipment. It also provides hay and forage equipment, such as self-propelled forage harvesters and attachments, balers, and mowers; turf and utility equipment, including riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, and commercial mowing equipment; integrated agricultural management systems technology and solutions; and other outdoor power products. The Construction and Forestry segment manufactures and distributes backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; milling machines; recyclers; slipform pavers; surface miners; asphalt pavers; compactors; tandem and static rollers; mobile crushers and screens; mobile and stationary asphalt plants; and log skidders, loaders, forwarders, and harvesters, as well as feller bunchers and related attachments used in construction, earthmoving, road building, material handling, and timber harvesting applications. The Financial Services segment finances sales and leases agriculture and turf, and construction and forestry equipment. This segment also offers wholesale financing to dealers of the foregoing equipment; finances retail revolving charge accounts; and provides extended equipment warranties. It markets its products through independent retail dealer networks and retail outlets. The company was founded in 1837 and is based in Moline, Illinois.

Current Price: $162.98
Consensus Rating: Hold
Ratings Breakdown: 10 Buy Ratings, 7 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $172.28 (5.7% Upside)

#2 - Union Pacific Railroad (NYSE:UNP)

Union Pacific logo

Union Pacific Railroad (NYSE: UNP) - Rail companies are considered a bellwether of the broader economy. Although a company like Union Pacific doesn’t reach across every sector, they do tend to point to strengths in the manufacturing and energy sectors. Over the last 20 years, American railroad companies have undergone a "Rail Renaissance" that changed their outlook among investors. Once an industry seen as heavily prone to recessions, they have now become an industry that uses automation that allows the railways to operate safely with lower onboard personnel costs. As a result, UNP – and all Class 1 railroads in the United States – were able to make, and retain, a profit even during the depths of the financial crisis and recession of 2008 and 2009. Union Pacific, the largest publicly quoted railroad, operates throughout the western United States and is able to generate a return on invested capital (ROIC) of about 14% that figures to stay intact because of the territorial nature of railroads. In their Q4 2018 earnings report, they beat the consensus estimate of analysts of a $2.06 EPS by earning $2.12 per share. UNP currently offers a 2.1 dividend yield and has demonstrated a 5-year dividend growth rate of 14%.

About Union Pacific
Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, engages in the railroad business in the United States. It offers transportation services for agricultural products, including grains, commodities produced from grains, fertilizers, and food and beverage products; coal and sand, as well as petroleum, liquid petroleum gases, and renewables; and construction products, industrial chemicals, plastics, forest products, specialized products, metals and ores, and soda ash, as well as intermodal and finished vehicles. As of December 31, 2018, its rail network included 32,236 route miles linking Pacific Coast and Gulf Coast ports with the Midwest and Eastern United States gateways. Union Pacific Corporation was founded in 1862 and is headquartered in Omaha, Nebraska.

Current Price: $179.64
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $192.32 (7.1% Upside)

#3 - J.B. Hunt (NASDAQ:JBHT)

J B Hunt Transport Services logo

J.B. Hunt (NASDAQ: JBHT) - If you’re looking for a transportation stock that’s not a railroad, it may be time to hit the road. The trucking industry as a whole has been stressed at keeping up with the demands of a growing economy. The American Trucking Association’s Tonnage Index is near record levels, but there is a lack of qualified truck drivers. And while shipping costs seem to be stabilizing, shippers will still be likely absorbing higher shipping costs for the majority of 2019. But while the industry as a whole is going through its share of turbulence, investors can still profit by investing in best-of-class companies. JBHT fits that mold. Shares of JBHT rose 15% in January and reported Q4 2018 earnings of $0.81 per share, which was a 20% decrease from the same period in 2017 but beat the consensus expectation of analysts.  The company showed growth on the top line as well by reporting $2.32 billion in revenue that was a 16% year-over-year increase. And for the 14thconsecutive year, the company raised its quarterly dividend. 

About J B Hunt Transport Services
J.B. Hunt Transport Services, Inc., together with its subsidiaries, provides surface transportation and delivery services in the continental United States, Canada, and Mexico. It operates in four segments: Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS), and Truckload (JBT). The JBI segment offers intermodal freight solutions, including origin and destination pickup, and delivery services. It operates 88,739 pieces of company-owned trailing equipment; owns and maintains its own chassis fleet of 81,442 units; and manages a fleet of 5,017 company-owned tractors, 633 independent contractor trucks, and 6,208 company drivers. The DCS segment designs, develops, and executes supply-chain solutions that support various transportation networks. As of December 31, 2018, it operated 9,652 company-owned trucks, 412 customer-owned trucks, and 51 independent contractor trucks, as well as 20,344 owned pieces of trailing equipment and 6,366 customer-owned trailers. The ICS segment offers traditional freight brokerage and transportation logistics solutions; and flatbed, refrigerated, expedited, and less-than-truckload solutions, as well as various dry-van and intermodal solutions. It also provides single-source logistics management for customers that desire to outsource their transportation functions. This segment operates 44 remote sales offices or branches. The JBT segment offers full-load and dry-van freight services by utilizing tractors operating over roads and highways. As of December 31, 2018, it operated 1,139 company-owned tractors. The company also transports or arranges for the transportation of freight, including general merchandise, specialty consumer items, appliances, forest and paper products, food and beverages, building materials, soaps and cosmetics, automotive parts, agricultural products, electronics, and chemicals. J.B. Hunt Transport Services, Inc. was incorporated in 1961 and is headquartered in Lowell, Arkansas.

Current Price: $112.86
Consensus Rating: Hold
Ratings Breakdown: 3 Buy Ratings, 15 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $115.11 (2.0% Upside)

#4 - Alphabet (NASDAQ:GOOGL)

Alphabet logo

Alphabet (NASDAQ: GOOGL) - If you have an appetite for technology stocks, Alphabet (the company formerly known as Google) bears close attention. One of the common features of successful technology companies is their ability to adapt to change. In addition to owning YouTube and retaining their lead as an internet search and advertising space, they are making significant investments into artificial intelligence (AI) and virtual reality. And they’re not stopping there. Their Android phones are gaining in popularity and their Google Home product is making inroads into the internet of things category that is still largely Amazon’s turf. Strategic expansions will include Google Fiber, Google Play, Google Cloud which will help Alphabet move into the growing cloud space. As an investor, one of the many reasons to be excited is their financial stability. Their Google division remains their cash cow, generating revenue at over 20% year over year, allowing it to make investments in all these different areas without having to take on debt. In their Q4 2018 earnings report, Alphabet reported a revenue increase of 22% and earnings of $12.77. Both numbers beat expectations.

About Alphabet
Alphabet Inc., through its subsidiaries, provides online advertising services in the United States and internationally. The company offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal Internet products, such as Ads, Android, Chrome, Commerce, Google Cloud, Google Maps, Google Play, Hardware, Search, and YouTube, as well as technical infrastructure and newer efforts, including Virtual Reality. This segment also offers digital content, enterprise cloud services, and hardware products, as well as other miscellaneous products and services. The Other Bets segment includes businesses, such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X, as well as fiber Internet and Television services. Alphabet Inc. was founded in 1998 and is headquartered in Mountain View, California.

Current Price: $1,450.50
Consensus Rating: Buy
Ratings Breakdown: 39 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $1,483.93 (2.3% Upside)

#5 - Adobe (NASDAQ:ADBE)

Adobe logo

Adobe (NASDAQ: ADBE) - Yet another technology stock that merits a closer look despite the recent selloff is Adobe. The undisputed leader in cloud space technology is primed to benefit from an industry that is forecasting demand for cloud services to grow over the next 2-3 years. In their most recent earnings guidance, the company forecast 20% growth for its 2019 overall sales and digital media revenue. Unlike the FAANG stocks, Adobe made it through the tech sell-off in July relatively unscathed and the stock has continued to rise. In fact, some analysts have taken note of how Adobe has continued to rise in a sector where many companies have not. This is why many analysts are bullish on the stock’s prospects going forward and why, even with their stock trading at a record level right now, the best may be yet to come, which would make their current price seem like a bargain. Not only does the company pass the smell test from a fundamental analysis viewpoint, but the technical indicators look great as well. Their stock chart for 2018 shows rhythmic, symmetrical support and a stock price that has risen to new heights off support levels.

About Adobe
Adobe Inc. operates as a diversified software company worldwide. Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content. Its flagship product is Creative Cloud, a subscription service that allows customer to download and access the latest versions of its creative products. This segment serves traditional content creators, Web application developers, and digital media professionals, as well as their management in marketing departments and agencies, companies, and publishers. The company's Digital Experience segment offers solutions for how digital advertising and marketing are created, managed, executed, measured, and optimized. This segment provides analytics, social marketing, targeting, media optimization, digital experience management, cross-channel campaign management, marketing automation, audience management, and video delivery and monetization solutions to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers. Its Publishing segment offers products and services, such as e-learning solutions, technical document publishing, Web application development, and high-end printing, as well as publishing needs of technical and business, and original equipment manufacturers (OEMs) printing businesses. The company offers its products and services directly to enterprise customers through its sales force, as well as to end-users through app stores and through its Website at adobe.com. It also distributes products and services through a network of distributors, value-added resellers, systems integrators, software vendors and developers, retailers, and OEMs. The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. The company was founded in 1982 and is headquartered in San Jose, California.

Current Price: $354.63
Consensus Rating: Buy
Ratings Breakdown: 19 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $337.79 (-4.7% Upside)

#6 - Boeing (NYSE:BA)

Boeing logo

Boeing (NYSE: BA) - Boeing may be considered more of a long-term play, but it is well positioned for growth. The airline industry is evolving into a model that will make air travel more affordable and accessible. Boeing is forecasting demand for air travel will grow at an average annualized rate of 4.7% through 2037. And the International Air Transport Association issued a forecast that shows China will add one billion new passengers over the next 20 years. This will mean that there will need to be more jets to accommodate the traffic. In fact, for Boeing, those numbers would suggest that they will be nearly doubling their fleet. As evidence of this, the company announced that they plan to boost 737 jetliner production to a rate of 57 a month by June (an approximate 10% increase from current levels). And while the analysts' expectations of 7% revenue growth in 2019 are not going to get a lot of investors excited, what may turn heads is a 20% growth in per-share earnings. Boeing recently reported strong Q4 2018 earnings and their stock is up over 21% for the year, reaching a new high of $394.40 on February 4, 2019.

About Boeing
The Boeing Company, together with its subsidiaries, designs, develops, manufactures, sales, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide. The company operates in four segments: Commercial Airplanes; Defense, Space & Security; Global Services; and Boeing Capital. The Commercial Airplanes segment provides commercial jet aircraft for passenger and cargo requirements, as well as fleet support services, principally. The Defense, Space & Security segment engages in the research, development, production, and modification of manned and unmanned military aircraft and weapons systems; strategic defense and intelligence systems, which include strategic missile and defense systems, command, control, communications, computers, intelligence, surveillance and reconnaissance, cyber and information solutions, and intelligence systems; and satellite systems, such as government and commercial satellites, and space exploration. The Global Services segment offers products and services, including supply chain and logistics management, engineering, maintenance and modifications, upgrades and conversions, spare parts, pilot and maintenance training systems and services, technical and maintenance documents, and data analytics and digital services to commercial and defense customers. The Boeing Capital segment offers financing services and manages financing exposure for a portfolio of equipment under operating and finance leases, notes and other receivables, assets held for sale or re-lease, and investments. The Boeing Company was founded in 1916 and is based in Chicago, Illinois.

Current Price: $316.56
Consensus Rating: Hold
Ratings Breakdown: 6 Buy Ratings, 15 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $352.79 (11.4% Upside)

#7 - Align Technology (NASDAQ:ALGN)

Align Technology logo

Align Technology (NASDAQ: ALGN) - Parents with kids may not know the name Align Technology, but many of them are familiar with their Invisalign dental braces. The clear braces market is exploding in the United States. This has caused investors to frown on ALGN’s stock. More competitors have entered the field, the most notable of which is the Smile Direct Club (SDC) which delivers “direct to home” products. ALGN is also facing a very real challenge of expiring patents. While these issues pose some challenges for ALGN, the company is still well positioned for growth. One of the reasons is that the Invisalign brand is still the leader in the business, a number that only reflects the number of customers who are receiving orthodontic care. The company is hoping to capitalize on the larger market of customers who may need some form of orthodontic care but do not currently receive it. As proof of that, the company is projecting 13% annual growth in the invisible orthodontics market through 2022, and sales growth of 23% in 2019. And to hedge their bets, the company owns a 19% stake in SDC.

About Align Technology
Align Technology, Inc., a medical device company, designs, manufactures, and markets Invisalign clear aligners and iTero intraoral scanners and services for orthodontics, and restorative and aesthetic dentistry worldwide. It operates in two segments, Clear Aligner; and Scanners and Services. The Clear Aligner segment consists of comprehensive products, including Invisalign Comprehensive treatment that addresses the orthodontic needs of teenage patients, such as compliance indicators and compensation for tooth eruption; Invisalign Assist treatment, which offers support to dental practitioners throughout the treatment process, including progress tracking; and Invisalign First Phase I and Invisalign First Comprehensive Phase II package for younger patients with early mixed dentition with a mixture of primary/baby and permanent teeth. This segment's non-comprehensive products comprise Invisalign Express 10, Invisalign Express 5, Express Package, Lite Package, Invisalign Go, and SmileDirectClub; and non-case products include retention products, Invisalign training fees, and sales of ancillary products, such as cleaning material, and adjusting tools used by dental professionals during the course of treatment. The Scanners and Services segment offers restorative software for general practitioner dentists, prosthodontists, periodontists, and oral surgeons; software for orthodontists for digital records storage, orthodontic diagnosis, and for the fabrication of printed models and retainers; computer-aided design/computer-aided manufacturing services and ancillary products, such as disposable sleeves for the wand; and iTero applications and tools. The company was founded in 1997 and is headquartered in San Jose, California.

Current Price: $267.82
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $271.00 (1.2% Upside)

The story of 2019 is just beginning to be written, but the message is far from clear. Unemployment is low, but there remains concern about the direction of interest rates. Gridlock in the U.S. Government is welcome for advocates of a smaller government, but the looming specter of another potential government shutdown is hurting consumer confidence. This uncertainty is being reflected in the market. But rather than staying away from the market, now can be the perfect time to look at some well-established names.

Investing in blue-chip stocks is considered to be among the safest options for investors. Blue-chip companies are known for having large market caps strong financial positions, and reputable brand names that have a large following in the general public. An additional benefit for investors is that many blue-chip companies have a proven track record of delivering dividends to their shareholders. Does this mean that blue-chip stocks will never decline? Of course not. But because of their size and strength, blue-chip companies are usually well positioned to weather the storm that comes from a volatile investment environment. Historically, blue-chip stocks take smaller losses and thus typically recover more rapidly.

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