Here are 2 blue chip stocks to help protect your portfolio

Inflation Chat is once again a hot topic this week. The December consumer price index (CPI) will be published on Thursday, and analysts hope for a repeat of last month’s positive inflation declaration.

According to the forecast, the core consumer price index rose by 0.3% in December. Although this is slightly higher than in November, it will still be in line with the quarterly average and less than the 0.5% average seen between January and September amid the highest inflation in decades..

The results will also provide insight into whether the Fed will loosen its rate hikes at its January 31-Feb meeting. 1 to decide on the matter. It is hoped that the Fed’s base rate will rise by only 25 basis points, but a half-point increase is not excluded.

Given all the possibilities, the best thing to do right now is to choose stocks with caution and rely on blue chip stocks — companies with excellent reputations and a track record of success, even in difficult macroeconomic conditions.

With that in mind, we dug into the TipRanks database and pulled out two such names—both stock market giants who outperformed the market last year and could shield the portfolio from any incoming volatility. Let’s check the details.

Walmart Inc. (TDC)

Blue chip stocks, you say? Well, there’s no better place to start than Walmart, officially the largest company in the world by revenue. As of October 2022, the retail giant topped the Fortune Global 500 list with around $570 billion in annual revenue. Walmart boasts 10,586 stores and clubs in 24 countries operating under 46 banners, employing approximately 2.3 million employees worldwide, of which 1.6 million are in the US.

Walmart’s reputation as a company to own in tough times is borne out by its strong performance over the past year. Even though all the major indexes settled solidly in negative territory in 2022, WMT stock avoided the carnage and gained 2%.

This is because, in the real world, Walmart has shown its resilience to tough conditions. This is evidenced by the company’s latest quarterly report for the third quarter of fiscal year 2023.

Revenue rose 8.8% year-on-year to $152.8 billion, beating Street’s forecast by $6 billion, while like-for-like sales rose 8.2%, also beating the consensus estimate of 6.9%. The company ended up with an earnings per share of $1.50, easily beating the forecast of $1.32. Importantly, in the fourth quarter, Walmart expects consolidated net sales to grow by about 5.5%, while consolidated adjusted operating income is expected to decline by 6.5% to 7.5%, improving its previous 9% decline forecast.

All this has caught the attention of Credit Suisse’s Karen Short, who sees several reasons to have WMT stock in her portfolio. These include: “1) WMT has been gaining significant market share since early 2021; 2) Our view that WMT is a good defensive name in an uncertain macro environment; 3) The price difference with regular grocers remains significant; 4) Potentially weak macroeconomic background should accelerate the growth of the share; 5) In light of the potential merger of two of the largest traditional food retailers (the merger of Kroger and Albertsons), we believe that WMT is well placed to be even more aggressive than usual to gain a stake; and 6) Alternative profit streams must continue to develop and contribute to operating profit.”

So it’s not surprising that a 5-star analyst rates WMT stock as “good” (i.e. “buy”), while its $170 price target leaves room for 17% growth next year. (To view Short’s track record, click here)

Most analysts read from the same page; the stock is in contention for a Strong Buy consensus rating based on 20 buys versus 5 holds. (See Walmart stock forecast)

Visa Inc. (AT)

Visa, one of the world’s most valuable firms, is a leader in international payments. In fact, the company does not issue cards, extend credit, or impose tariffs or fees on consumers. What it does is provide financial institutions with access to payment instruments bearing the Visa name, which they can use to provide credit, debit, prepaid and cash services to their customers. More than 200 countries and territories can accept digital payments thanks to their network, which can process up to 30,000 transactions simultaneously and reach 100 billion calculations per second.

Visa’s latest earnings report – for the fiscal fourth quarter of 2022 (September quarter) – was strong. Revenue rose 19% year-over-year to $7.8 billion, beating Wall Street expectations by $250 million. Analysts called for app. Earnings per share was $1.86, but Visa brought in a much better $1.93. In other good news, the quarterly cash dividend was increased by 20% to $0.45 per share, and a new $12.0 billion share buyback program was approved.

This is what protected Visa from the stock market crash; stocks are up 4% over the past year. According to Evercore analyst David Togut, 2023 should be another good year that sets out a bullish scenario for V, bear market or not.

“V’s robust business model and significant moat around its network offers best-in-class risk-reward ratios with loss protection in an uncertain macro environment and substantial growth opportunities in a growing economy,” the analyst explained. “Because less than 50% of V’s revenue is generated outside the US, and the inflation-hedged revenue model is ad valorem, we see moderate risk to V’s revenue as many international economies could lag behind the US.”

To that end, Togut rates V’s stock as a “best buy” (i.e. “buy”) along with a price target of $290. Consequences for investors? Upside potential ~32% from current levels. (To see Togut’s track record, Click here)

As for the rest of the Street, most of them are on board too. The aggregate ratings show 20 buys, 1 hold, and 2 sells, all combined into a “strong buy” consensus rating. (See Visa stock forecast on TipRanks)

For good stock trading ideas at an attractive price, visit TipRanks Best Stocks to Buy, a recently launched tool that aggregates all of TipRanks stock analytics.

Disclaimer: The views expressed in this article are solely those of a selected analyst. The content is for informational purposes only. It is very important to conduct your own analysis before making any investment.

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