The Dow Jones Industrial Average hit an all-time high of 40,720.64 on July 15. Despite the new record, the 30 blue-chip stocks that make up the index are only up 8% in 2024, less than half the S&P 500.
Gone are the days when investors considered these 30 Dow stocks the best investments you could own for the long haul. Technology certainly has had something to do with the changing of the guard. The same could be said for consumer discretionary stocks.
Today’s blue chips are not necessarily the Dow 30. They’re stocks like Nvidia (NASDAQ:NVDA) with growth potential for years, if not decades, to come.
So, if you buy blue-chip stocks in July, it should be one of these three alternatives to Dow 30 stocks. Each operates in the same sector as the three Dow 30 stocks, with better prospective returns over the long haul.
Costco (COST)
Finviz.com considers Costco (NASDAQ:COST) part of the consumer defensive sector. Others would say “consumer staples.” That’s neither here nor there. It is my blue-chip stock to buy as an alternative to Coca-Cola (NYSE:KO).
James Quincey became the CEO of Coca-Cola in January 2017 after 11 years at the company. In the past 7.5 years, he’s been the beverage company’s top leader, and its shares have appreciated by 54%. COST stock returned 427% in the same period, nearly eight times Coca-Cola’s performance.
I’m a long-time Costco shopper. Its recent announcement that it would raise the annual membership fee Sept. 1 to $65 for its individual Gold Star and business members in the U.S. and Canada. Its premium memberships in the U.S. and Canada will rise to $130.
The stock fell on the news.
However, considering it hasn’t raised the membership fee since 2017 and is about two years past the five-year historical average, I’m not sure how members or investors can be negative about the action taken.
Costco has always been about providing consumers with the lowest prices possible, generating most of its profits from membership fees. Compared to beverage companies Coke and PepsiCo (NASDAQ:PEP), which have gone hog wild on price increases over the past two years, Costco has held its prices steady.
It’s a much better blue-chip stock.
TJX Companies (TJX)
TJX Companies (NYSE:TJX) is considered part of the consumer cyclical sector by Finviz.com. Others would say “consumer discretionary.” It is one of the top blue-chip stocks to buy as an alternative to McDonald’s (NYSE:MCD).
First, if you want to own a restaurant stock, Chipotle Mexican Grill (NASDAQ:CMG) would be a better choice given its pricing power, but I digress.
In May, the company reported Q1 2024 results that included earnings per share of 93 cents, 22.4% higher than a year ago and five cents better than analyst expectations. Revenue increased by 5.9% year-over-year to $12.48 billion. However, some investors focused on the 3.0% same-store sales growth in the quarter, 70 basis points less than the Wall Street consensus.
For the second quarter, it sees an EPS of 89 cents at the midpoint of guidance, five cents shy of analyst expectations. One analyst, Jefferies analyst Corey Tarlowe, sees this as a case of “underpromise and overdeliver.”
“We believe guidance remains conservative, and continue to see a favorable buying environment for [TJX’s stock],” MarketWatch reported Tarlowe’s comments to clients.
As McDonald’s prices have risen, the restaurant chain has struggled to keep low-income customers buying its products. TJX is the better blue-chip stock to buy.
Pinterest (PINS)
Pinterest (NYSE:PINS) is part of the communication services sector. I’m making a controversial call by selecting it as a better blue-chip stock to buy than Walt Disney (NYSE:DIS).
That’s especially true since the social media platform’s stock struggled in the past month, down over 7%. However, over the past five years, despite underperforming relative to the index, PINS stock gained 59%, 89 percentage points better than Disney.
Further, with the country divided, it’s about the only social media platform whose user interactions aren’t completely unhealthy and uncalled for. It’s very good for the future. Here’s why.
In Q1 2024, its earnings jumped 150%. FactSet estimates suggest that they’ll rise 32% YOY in Q2, 23% in Q3 and 19% for Q4, with revenue growth over this period of 19.5% per quarter.
“‘Thanks to our investments in AI (artificial intelligence) and shopability, we’re driving even greater returns for advertisers and gaining access to performance budgets,’ said Bill Ready, Pinterest CEO, in its earnings recent report. The company generates revenue from online ads,” Investor’s Business Daily reported.
I might be an outlier, but I believe its stock will outperform Disney over the next five years like it did the past five. That makes it a top blue-chip stock to buy in July.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.