10 Global Blue-Chip Stocks For The Long Term

However,
investors
may
differ
in
how
they
define
blue-chip
companies.
Some
investors
demand
that
a
blue-chip
stock
be
included
in
a
particular
index,
such
as
the
Dow
Jones
Industrial
Average.
Others
may
only
include
dividend-paying
companies
on
their
lists
of
blue-chip
stocks.
Still
others
may
have
specific
market-capitalization
thresholds
for
blue-chip
companies.

The
companies
on
Morningstar’s
list
of
the
best
blue-chip
stocks
to
buy
for
the
long
term
share
a
few
qualities.

The
stocks
are
from
companies
included
on
Morningstar’s
list
of
the Best
Companies
to
Own for
2023.
Companies
on
this
list
have
wide Morningstar
Economic
Moat
Ratings and
predictable
cash
flows,
and
they
are
run
by
management
teams
that
make
smart
capital-allocation
decisions.

These
stocks
look
undervalued,
which
means
they’re
trading
below
Morningstar’s fair
value
estimates.

Their
market
capitalisations
top
$100
billion.

10
Best
Blue-Chip
Stocks
to
Buy
for
the
Long
Term

These
are
the
largest
firms
by
market
capitalisation
on
Morningstar’s
Best
Companies
to
Own
list
whose
stocks
were
at
least
10%
undervalued
as
of
September
15
2023.

Taiwan
Semiconductor
Manufacturing TSM;

Here’s
a
bit
more
on
each
of
these
blue-chip
stocks
for
the
long
term,
as
of
September
15.

Taiwan
Semiconductor
Manufacturing

• Market
  Capitalization:
  $454
  billion;
• Morningstar
  Price/Fair
  Value:
  0.65;
• Morningstar
  Style
  Box:
  Large
  Blend;
• Trailing
  12-Month
  Yield:
  2.52%;
• Morningstar
  Capital
  Allocation
  Rating:
  Exemplary;
• Industry:
  Semiconductors.

Taiwan
Semiconductor
Manufacturing
Company
(TSMC)
tops
our
list
of
the
best
blue-chip
stocks
for
the
long
term.
The
world’s
largest
dedicated
contract
chip
manufacturer,
TSMC
should
be
a
significant
beneficiary
in
high-performance
computing
with
additional
upside
potential
from
generative
artificial
intelligence,
says
Morningstar
analyst
Phelix
Lee.

However,
the
firm
has
issued
tapered
its
guidance
for
full-year
2023,
which
poses
a
short-term
downside
for
the
stock,
Lee
adds.
He
also
notes
that
TSMC
has
generated
more
stable
earnings
than
many
of
its
peers,
which
has
led
to
more
consistent
(and
growing)
dividends
over
time.
Taiwan
Semiconductor’s
stock
trades
35%
below
our
fair
value
estimate
of
$137.

Nestle

• Market
  Capitalization:
  $314
  billion;
• Morningstar
  Price/Fair
  Value:
  0.90;
• Morningstar
  Style
  Box:
  Large
  Blend;
• Trailing
  12-Month
  Yield:
  2.81%;
• Morningstar
  Capital
  Allocation
  Rating:
  Standard;
• Industry:
  Packaged
  Foods.

The
only
packaged
foods
maker
on
our
list
of
the
top
blue
chip
companies
to
buy,
Nestle
stock
trades
10%
below
our
fair
value
estimate
of
$131.
The
largest
food
and
beverage
manufacturer
in
the
world
by
sales,
the
company’s
famous
brands
include
its
namesake,
Nescafe,
Perrier,
and
Purina,
among
others.
Management
has
done
a
good
job
of
reinvigorating
growth
through
active
portfolio
management,
resetting
legacy
businesses,
and
investment
in
high-growth
areas,
notes
Morningstar
senior
analyst
Ioannis
Pontikis.

This
blue-chip
company’s
balance
sheet
is
solid,
and
we
think
Nestle’s
strong
multicategory,
multinational
presence
makes
it
an
essential
brand
manufacturer
and
supplier
for
retailers,
Pontikis
adds.

Roche

Market
Capitalization:
$235
billion;

Morningstar
Price/Fair
Value:
0.65;

Morningstar
Style
Box:
Large
Blend;

Trailing
12-Month
Yield:
3.56%;

Morningstar
Capital
Allocation
Rating:
Exemplary;

Industry:
Drug
Manufacturers –
General.

The
largest
drugmaker
on
our
blue-chip
stocks
list,
Roche
stock
trades
35%
below
our
fair
value
estimate
of
$56.
The
company’s
drug
portfolio
and
industry-leading
diagnostics
provide
significant
competitive
advantages
and
underpin
our
wide
economic
moat
rating,
says
Morningstar
strategist
Karen
Andersen.

“This
Swiss
healthcare
giant
is
in
a
unique
position
to
guide
healthcare
into
a
safer,
more
personalised,
and
more
cost-effective
endeavor,”
she
notes.
With
its
biologics
focus
and
innovative
pipeline,
we
expect
Roche
to
continue
to
achieve
growth
as
its
blockbusters
face
competition.

ASML

• Market
  Capitalization:
  $235
  billion;
• Morningstar
  Price/Fair
  Value:
  0.80;
• Morningstar
  Style
  Box:
  Large
  Growth;
• Trailing
  12-Month
  Yield:
  1.06%;
• Morningstar
  Capital
  Allocation
  Rating:
  Exemplary;
• Industry:
  Semiconductor
  Equipment
  &
  Materials.

The
second
undervalued
technology
company
on
our
list
of
the
best
blue
chip
stocks
to
buy,
ASML
stock
trades
20%
below
our
fair
value
estimate.
As
the
predominant
supplier
of
photolithography
equipment
for
semiconductor
manufacturers,
ASML
should
materially
benefit
from
the
proliferation
of
extreme
ultraviolet
lithography
at
leading-edge
chipmakers,
argues
Morningstar
analyst
William
Kerwin.
We
think
management
has
done
an
exemplary
job
of
allocating
capital,
strengthening
the
company’s
competitive
and
market
positions,
he
adds.
We
think
ASML
stock
is
worth
$750
per
share.

Bank
of
America

• Market
  Capitalisation:
  $229
  billion;
• Morningstar
  Price/Fair
  Value:
  0.82;
• Morningstar
  Style
  Box:
  Large
  Value;
• Trailing
  12-Month
  Yield:
  3.13%;
• Morningstar
  Capital
  Allocation
  Rating:
  Standard;
• Industry:
  Banks –
  Diversified.

Bank
of
America
stock
trades
18%
below
our
fair
value
estimate.
Considered
to
be
one
of
the
preeminent
banking
franchises
today,
Bank
of
America
has
one
of
the
best
retail
branch
networks
and
overall
retail
franchises
in
the
United
States,
is
a
leading
investment
bank
and
a
top-four
US
credit
card
issuer,
and
owns
the
Merrill
Lynch
franchise,
notes
Morningstar
strategist
Eric
Compton. Second-quarter
earnings were
solid
thanks
to
higher
net
interest
income
and
trading
results,
though
expenses
crept
higher.
We
think
Bank
of
America
stock
is
cheap
and
worth
$35
per
share.

AstraZeneca

• Market
  Capitalisation:
  $210
  billion;
• Morningstar
  Price/Fair
  Value:
  0.88;
• Morningstar
  Style
  Box:
  Large
  Growth;
• Trailing
  12-Month
  Yield:
  2.18%;
• Morningstar
  Capital
  Allocation
  Rating:
  Exemplary;
• Industry:
  Drug
  Manufacturers –
  General.

AstraZeneca
is
the
second
drugmaker
on
our
list
of
blue-chip
stocks
for
the
long
term.
The
drugmaker’s
portfolio
spans
several
major
therapeutic
classes,
including
gastrointestinal,
diabetes,
cardiovascular,
cancer,
and
rare
diseases
among
them.

Morningstar
sector
director
Damien
Conover
argues
that
the
firm’s
pipeline
is
one
of
the
strongest
in
the
drug
group,
with
several
key
products
that
have
blockbuster
potential.
We
think
AstraZeneca
is
well
positioned
for
growth;
we’re
projecting
8%
annual
sales
growth
over
the
next
five
years
as
new
products
offset
patent
losses,
Conover
notes.
AstraZeneca
stock
is
12%
undervalued
relative
to
our
$78
fair
value
estimate.

Thermo
Fisher
Scientific

• Market
  Capitalisation:
  $199
  billion;
• Morningstar
  Price/Fair
  Value:
  0.86;
• Morningstar
  Style
  Box:
  Large
  Blend;
• Trailing
  12-Month
  Yield:
  0.27%;
• Morningstar
  Capital
  Allocation
  Rating:
  Exemplary;
• Industry:
  Diagnostics
  &
  Research.

Thermo
Fisher
Scientific
stock
is
about
14%
undervalued
today.
The
premier
life
sciences
supplier
with
an
unmatched
portfolio
of
products,
resources,
and
capabilities,
Thermo
Fisher
is
committed
to
being
a
one-stop
shop
and
go-to
provider
of
life
sciences
instruments
and
consumables,
says
Morningstar
director
Alex
Morozov.
To
that
end,
the
company
has
been
“a
serial
acquirer,”
notes
Morozov,
and
is
skilled
at
quickly
integrating
its
acquisitions
to
extract
meaningful
synergies.
Although
we
think
that
management
has
done
a
great
job
of
capital
allocation
in
general,
the
dividend
policy
is
lacking:
Thermo
Fisher
has
the
lowest
dividend
yield
of
the
blue-chip
stocks
on
our
long-term
buy
list.
We
think
the
stock
is
worth
$600
per
share.

Pfizer

• Market
  Capitalisation:
  $192
  billion;
• Morningstar
  Price/Fair
  Value:
  0.71;
• Morningstar
  Style
  Box:
  Large
  Value;
• Trailing
  12-Month
  Yield:
  4.85%;
• Morningstar
  Capital
  Allocation
  Rating:
  Standard;
• Industry:
  Drug
  Manufacturers –
  General.

Pfizer
stock
offers
the
highest
trailing
yield
among
our
list
of
the
best
blue
chip
stocks
to
buy
for
the
long
term.
We
don’t
think
the
market
fully
appreciates
the
pharmaceutical
giant’s
ability
to
offset
major
patent
losses
over
the
next
five
years,
argues
Morningstar’s
Conover.

We’re
most
bullish
on
several
near-term
launches,
including
the
respiratory
syncytial
virus
vaccine
and
immunology
drugs
ritlecitinib
and
etrasimod,
Conover
says.
We
expect
the
firm’s
falling
Covid-19
vaccine
and
treatment
sales
will
create
a
drag
on
earnings
growth
in
2023,
but
we
project
a
healthier
annual
growth
rate
during
the
next
five
years,
he
adds.
We
think
Pfizer
stock
is
worth
$48
per
share;
the
stock
currently
trades
29%
below
that.

Comcast

• Market
  Capitalisation:
  $187
  billion;
• Morningstar
  Price/Fair
  Value:
  0.76;
• Morningstar
  Style
  Box:
  Large
  Value;
• Trailing
  12-Month
  Yield:
  2.45%;
• Morningstar
  Capital
  Allocation
  Rating:
  Standard;
• Industry:
  Telecom
  Services.

Trading
24%
below
our
fair
value
estimate
of
$60,
Comcast
is
the
only
telecom
stock
on
our
list
of
blue-chip
companies
to
buy.
Growth
in
Comcast’s
cable
business
has
slowed,
and
we
expect
it
to
continue
to
slow
as
more
customers
access
fiber
and
wireless
network
alternatives.
We
nevertheless
think
Comcast
will
be
able
to
limit
broadband
share
losses
in
the
coming
years
while
enjoying
solid
pricing
power,
says
Morningstar
director
Mike
Hodel.
NBCUniversal
isn’t
as
well
positioned,
but
we
like
the
idea
of
expanding
the
theme
park
business
around
key
content
franchises,
he
adds.
A
solid
balance
sheet
has
allowed
Comcast
to
aggressively
repurchase
shares
and
pay
decent
dividends.

Wells
Fargo

Market
Capitalisation:
$157
billion;

Morningstar
Price/Fair
Value:
0.70;

Morningstar
Style
Box:
Large
Value;

Trailing
12-Month
Yield:
2.87%;

Morningstar
Capital
Allocation
Rating:
Standard;

Industry:
Banks –
Diversified.

Wells
Fargo
rounds
out
our
blue-chip
stocks
list.
It
remains
one
of
the
top
deposit
gatherers
in
the
US.
The
bank
is
in
the
midst
of
a
multi-year
rebuild,
with
years
of
expense-saving-related
projects
ahead
and
additional
investment
in
its
existing
franchises,
says
Morningstar’s
Compton.

The
bank
also
has
a
sizable
presence
in
the
middle-market
commercial
space
and
boasts
a
large
adviser
network,
and
these
factors
support
its
wide
economic
moat
rating. Second-quarter
earnings were
decent,
notes
Compton,
with
net
interest
income
outperforming
as
expenses
ticked
up.
Wells
Fargo
stock
trades
30%
below
our
fair
value
estimate
of
$61.

What
Are
the
Morningstar
Fair
Value
Estimate,
Style
Box,
and
Capital
Allocation
Rating?

The
Morningstar
fair
value
estimate
represents
what
Morningstar
analysts
think
a
particular
stock
is
worth.
Fair
value
estimates
are
rooted
in
the
fundamentals
and
based
on
how
much
cash
we
think
a
company
can
generate
in
the
future,
not
on
fleeting
metrics
such
as
recent
earnings
or
current
stock
price
momentum.

The
Morningstar
Style
Box,
meanwhile,
is
a
nine-square
grid
that
provides
a
graphical
representation
of
the
investment
style
of
stocks,
bonds,
or
funds.
Based
on
a
series
of
inputs –
including
a
company’s
historical
and
long-term
projected
growth
and
its
historical
and
forward-looking
price
multiples –
a
stock
is
classified
as
either
a
value
stock,
a
growth
stock,
or
a
core
stock.
A
stock
is
also
classified
as
either
small-cap,
mid-cap,
or
large-cap
based
on
its
market
capitalisation.

Lastly,
the
Morningstar
Capital
Allocation
Rating
is
an
assessment
of
how
well
a
company
manages
its
balance
sheet
investments
and
shareholders’
distributions.
Analysts
assign
each
company
one
of
three
ratings –
Exemplary,
Standard,
or
Poor –
based
on
their
assessments
of
how
well
a
management
team
provides
shareholder
returns.

How
to
Find
More
Blue-Chip
Companies
to
Invest
In

Of
course,
there
are
many
other
criteria
that
investors
can
use
to
find
blue
chip
stocks
to
buy
for
the
long
term.
Here
are
some
tools
that
investors
can
use
to
find
more
blue-chip
companies
to
research
further:

Investors
can
review
Morningstar’s
lists
of large-cap
value
stocks, large-cap
core
stocks,
and large-cap
growth
stocks.
The
lists
aren’t
restricted
by
quality
or
valuation;
rather,
they’re
complete
lists
of
the
large-cap
stocks
in
Morningstar’s
database
and
broadly
represent
a
starting
point
for
finding
blue-chip
companies.

Investors
can
use
the Morningstar
Investor
screener to
create
their
own
list
of
blue
chip
stocks
that
meet
their
specific
criteria.
Set
the
Investment
Type
to
stocks,
and
then
choose
what
market
capitalisation
threshold
you’d
like
in
the
Criteria
section.
You
can
then
refine
your
search
for
blue
chip
stocks
even
further
by
adding
valuation,
profitability,
and/or
dividend
requirements.
You
can
also
screen
your
list
of
blue
chip
stocks
by
Morningstar
Rating
or
economic
moat.

Investors
who’d
rather
invest
in
blue-chip
companies
through
a
managed
product
like
an
exchange-traded
fund
or
a
mutual
fund
can
also
use
the
Morningstar
Investor
screener.

For
Investment
Type,
choose
either
mutual
fund
or
ETF.
In
Search
Securities,
type
in
the
keyword
“blue
chip”.
Some
highly
rated
funds
and
ETFs
focused
on
blue-chip
stocks
include
Fidelity
Blue
Chip
Growth FBGRX and
T.
Rowe
Price
Blue
Chip
Growth
ETF TCHP.
Just
remember:
large-company
funds
and
broad
US
stock
index
funds
own
blue
chip
stocks;
you
may
not
necessarily
need
a
separate
blue-chip
fund
if
you
already
own
a
core
stock
fund.

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