Blue chips are rebounding: 3 stocks poised to rebound in 2024

Whether they are consumer, technology, financial or healthcare, blue-chip companies inspire investor confidence through their profitability and long-term growth.

This translates into greater resilience in the event of market downturns, as they can draw on vast capital reserves and strong credit positions. However, this also means that blue-chip stocks have less appreciation potential due to a greater market capitalization weighting that needs to be increased. For this reason, investors typically look for blue-chip stocks to buy during market downturns, so the valuation may be higher.

After the mid-April crisis, S&P500 rebounded to its all-time high of 5,264.85, after gaining 10% since the start of the year (YTD). But with so many companies considered safe bets, which ones have the greatest rally potential?

Costco (COST)

Two key ingredients make Costco (NASDAQ:COST) a special retail blue chip stock to buy. One is financial and the other social. On the one hand, the company relies on member contributions which provide predictable income streams. On the other hand, Costco facilitates this model in a world of widespread retail theft that forces Walmart (NYSE:WMT) And Target (NYSE:TGT)pack your bags and go to many regions.

Therefore, Costco’s reliable, high-margin business model, based on member access and tighter control, acts as a shield against social dysfunction. Additionally, Costco’s larger volume of merchandise consistently ensures good deals for customers, even though the range of these products may be limited.

Plus, it makes customers think of Costco during times of inflation and recession. In March, the company released its Q1 2024 earnings report, showing a 5.6% increase in revenue to $116.2 billion (ended 24 weeks). The retailer’s net profit increased to $1.7 billion from $1.46 billion a year ago.

At 0.335, the debt ratio is the lowest in ten years, close to the February 2020 level of 0.337. When it comes to analyst forecasts, COST stock continues to garner a strong Buy consensus. The Nasdaq average price target is now $792.36, up from $797.38 per share currently. The stock has appreciated 19% year-to-date, or 212% over five years, making the company one of the safest blue-chip stocks to buy.

Advanced Micro Devices (AMD)

Next to Nvidia (NASDAQ:NVDA), Advanced microsystems (NASDAQ:AMD) is a leading chipmaker that provides cutting-edge solutions for generative artificial intelligence (AI) Infrastructure.

However, even though the company exceeded its earnings per share (PES) estimates that over the last three consecutive quarters, AMD shares have seen a notable decline. Not long ago, they were down almost 9% and were trading at $144.27. This slowdown has occurred as AMD shares are down 14% over the past three months, while NVDA is up 22% for the same period.

The reasons for this crisis are twofold. Firstly the ASML Holding (NASDAQ:ASML) did not meet the estimated order forecasts in the first quarter. Second, Nvidia has benefited from such a concentration of investment that it is now considered an inflation hedge according to the Bloomberg Markets Live Pulse survey.

But it increases AMD’s rally potential. Not only is AMD’s flagship AI chip, the MI300X, a strong contender at a lower price, but the company is also pushing the boundaries of accelerated processing units (COULDs). These chips combine GPU and CPU in a single package, with the Ryzen 8000G being the latest to rival console gaming performance.

Without having to buy a discrete GPU for gaming, AMD’s APU push could make it the dominant integrated graphics brand. At the same time, the company is still targeting higher-tier users with cost-effective and competitive discrete GPUs like the RX 7000 series. Additionally, AMD’s RDNA 4 GPUs (RX 8000) would rival Nvidia’s flagship , the RTX 4080, for half the price.

Considering these factors, AMD’s analyst consensus, driven by Nasdaq, is a strong buy. AMD’s average price target is $192.4, up from the current $150.56 per share.

Linde PLC (LIN)

Following the attack on the Nord Stream gas pipelines, Linde (NASDAQ:LINEN) experienced several valuation peaks. Although based in the UK, the gas giant has global operations to help diversify Europe’s energy security. Additionally, LIN’s long-term contracts and supply chain make it a high-margin business.

In the first quarter of 2024, Linde PLC reported a 6% increase in operating profit to $2.1 billion. It generated net profit of $1.8 billion, up 8% year-on-year (YOY). Not only does Linde generate enough cash each quarter, but it has also returned $1.7 billion to shareholders through dividends and share buybacks.

Continuing its net zero emissions efforts, Linde PLC has signed a long-term agreement with H2 Steel Green on May 1, the world’s first large-scale green steel production plant. Demonstrating a strong commitment to ESG compliance, investors can rest assured that Linde PLC’s 0.523 debt-to-equity ratio continues to benefit from preferred financing.

Given its strong fundamentals and solid shareholder returns, Linde PLC represents one of the most attractive blue chip stocks to buy. The Nasdaq consensus is another strong buy. LIN’s average price target stands at $488.91 compared to the current $434.78 per share. Even the low estimate of $452 is above the current price level.

As of the date of publication, Shane Neagle did not hold (directly or indirectly) any positions in any securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com’s publishing guidelines.