7 Blue-Chip Stocks to Buy for a Market Pullback

Stocks to buy

After a blistering first half of the year, the outlook for the stock market has gotten murky. All three major U.S. indices declined in August, with the Dow Jones Industrial Average falling 2.4%, the Nasdaq losing 2.2%, and the benchmark S&P 500 sliding 1.7%.  Even September is off to a rocky start, which is sending many investors into safer blue-chip stocks to buy. After all, if we’re really headed for further declines, it’s better to hold highly stable, profitable stocks – especially if they also carry dividends. In fact, here are a few of the top blue-chip stocks to buy now.

Blue-Chip Stocks to Buy: Berkshire Hathaway (BRK-A/BRK-B)

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One of the top blue-chip stocks to buy is Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A /NYSE:BRK-B), which currently sits at an all-time high. Not only is the company safe, stable, and profitable, it has a well-respected billionaire at the helm. Helping, the company just posted impressive second-quarter financial results that showed the company’s operating earnings were 6.6% year-over-year to $10.04 billion. Cash holdings are even up to a whopping $150 billion.

Warren Buffett is famous for seeing all the angles in investing and never misses an opportunity to capitalize on a situation. His company has benefitted this year from high-interest rates, which are providing big returns on the aforementioned cash pile. Buffett also disclosed along with his Q2 results that Berkshire Hathaway holds more than $97 billion in short-term Treasury bills.

More recently, Buffett’s 13F unveiled a savvy investment in the biggest U.S. home builders that is designed to capitalize on the housing market., proving yet again why he’s one of the most successful investors.

Apple (AAPL)

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Next up on the list of hot blue-chip stocks to buy is one of Berkshire Hathaway’s biggest holdings, Apple (NASDAQ:AAPL). Buffett currently has nearly $175 billion invested in AAPL stock, with the holding comprising 47.5% of his entire portfolio.

Clearly, Buffett is a big fan of Apple. Fueling further potential upside, the company plans to unveil new products on Sept. 12. Some of the top expected products include the iPhone 15, a new iWatch, and a new operating system.  Apple is in the rare position of being under pressure with its new products as its second-quarter financial results showed declining sales across all of its devices, including the signature iPhone. Some analysts are saying that the iPhone 15 needs to be a global bestseller to get Apple back on track.

However, investors shouldn’t spend too much time worrying about AAPL stock. It’s up 51% this year and up nearly 250% in the last five years. And, as Buffett recently noted at this year’s annual Berkshire Hathaway meeting, people would rather give up a second car than their iPhone, making Apple a blue-chip stock to buy and hold.

Blue-Chip Stocks to Buy: Dick’s Sporting Goods (DKS)

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Investors can also take advantage of the latest dip in Dick’s Sporting Goods (NYSE:DKS). Since posting poor earnings, the DKS stock is down about 20%. Not only did DKS post a 23% drop in profits, but it also lowered its forward guidance for the remainder of the year. Not helping, it said finances were hurt by a slowdown in its outdoor category, which includes camping equipment, and also by a rise in theft at its 850 store locations.

Despite the poor Q2 showing, there is reason to remain bullish on DKS stock, especially over the long term. The company has taken swift and immediate action to address its problems, including using promotions to offload excess inventory and cutting 250 corporate jobs. In addition, we have to remember that September is traditionally Dick’s best sales month of the year. All thanks to back-to-school shopping.

Target (TGT)

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Down but not out, Target (NYSE:TGT) is another blue-chip stock ripe for the picking. Sure, the company has been punished after missing its Q2 sales forecast and lowering its forward guidance for all of 2023. It took even more punishment after noting consumer spending fell off a cliff. It’s even struggled to pull in inflation-fatigued consumers. However, it also appears that most of the negativity has been priced in.

It may take some time, but the Target stock should eventually rise from the ashes. In the meantime, the shares are attractively valued, trading at just 15 times future earnings. It also pays a dividend that yields 3.49% or $1.10 per share each quarter.

American Express (AXP)

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Credit card giant American Express (NYSE:AXP) is a true blue stock. It’s also a reliable Warren Buffett holding, with a yield of 1.52%. Better, AXP has consistently reported strong earnings – especially this year — despite economic uncertainty.  Also, American Express’ share price hasn’t been pulled lower by turmoil in the U.S. banking sector as many other financial securities have been.

For Q2 this year, the credit card issuer announced earnings per share (EPS) of $2.89, which was ahead of consensus forecasts of $2.81. Revenue for the quarter came in at $15.05 billion, which was a little below the consensus estimate of $15.41 billion. Most importantly, American Express said that it’s seeing record levels of spending on its credit cards, notably through purchases related to travel. It also reaffirmed its full-year 2023 guidance for earnings of $11.00 to $11.40 per share.

Intel (INTC)

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Intel (NASDAQ:INTC) finally got some good news with the company’s Q2 earnings print. After news of hemorrhaging cash and record losses, Intel’s stock rose 7% after it reported a return to profitability following two dismal quarters. Specifically, Intel announced EPS of 13 cents compared to a loss of 3 cents that had been expected.

Analysts and investors cheered the latest results even as Intel warned that it continues to see persistent weakness in all segments of its business. The return to profitability was achieved thanks to $3 billion in cost cuts. Some once skeptical analysts are now changing their tune and wondering if Intel might be able to become a world-leading fabrication company for chips and semiconductors.

Morgan Stanley (MS)

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Morgan Stanley’s (NYSE:MS) stock is essentially flat for the year (down 0.80%). In fact, the stock has been treading water since several regional U.S. lenders imploded this spring, notably Silicon Valley Bank. However, the MS stock is expected to rise sharply once sentiment towards the banking sector improves.

Morgan Stanley is also different than many other investment banks on Wall Street in that it is not solely dependent on deals such as initial public offerings (IPOs) and mergers and acquisitions (M&A) for its profits. CEO James Gorman had the foresight to focus much of the bank’s resources on wealth management even before the COVID-19 pandemic and 2022 bear market brought Wall Street deals to a near standstill. This diversification has helped Morgan Stanley weather economic cycles and achieve steady earnings relative to many of its peers.

On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

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.

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