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

Investors often hold blue-chip stocks at the core of their portfolios. That makes sense. After all, blue-chip companies are leaders in their industries. Their names are familiar to investors.

What Are Blue-Chip Stocks?

Blue-chip stocks are from companies that are large, well-established, and financially sound. These companies have strong brand names and reputations, and they generate dependable earnings. Blue-chip companies usually boast consistent dividends and are often considered to be less risky, given their financial stability.

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 2024. 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 caps top $100 billion.

10 Best Blue-Chip Stocks to Buy for the Long Term—October 2024

These are the largest firms by market cap on Morningstar’s Best Companies to Own list whose stocks were at least 15% undervalued as of Oct. 16, 2024.

1. Pfizer PFE
2. Roche RHHBY
3. Nike NKE
4. Anheuser-Busch InBev BUD
5. Sony SONY
6. Alphabet GOOGL
7. Nestle NSRGY
8. Airbus EADSY
9. Bristol-Myers Squibb BMY
10. Microsoft MSFT

Here’s a little bit about each of these blue-chip stocks for the long term. Data is as of Oct. 16.

Pfizer

• Market Capitalization: $168 billion
• Morningstar Price/Fair Value: 0.71
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 5.63%
• Morningstar Capital Allocation Rating: Standard
• Industry: Drug Manufacturers—General

Pfizer is the most undervalued company and offers the highest trailing yield on our list of the best blue-chip stocks to buy. A household name among drug manufacturers, Pfizer’s stock is currently trading at a 29% discount to its fair value estimate. The firm has strong cash flows generated from a basket of diverse drugs, says Morningstar Strategist Karen Andersen. Further, the company’s large size confers significant competitive advantages in developing new drugs. We expect steady growth until 2028 when patent losses will likely increase, but pipeline advancements hold the potential to mitigate pressures. We think Pfizer stock is worth $42 per share.

Roche

• Market Capitalization: $252 billion
• Morningstar Price/Fair Value: 0.71
• Morningstar Style Box: Large Core
• Trailing 12-Month Yield: 3.45%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Drug Manufacturers—General

Roche stock trades 29% below our fair value estimate of $55 per share. The company‘s drug portfolio and industry-leading diagnostics provide significant competitive advantages and underpin our wide economic moat rating, says Morningstar’s Andersen. “This Swiss healthcare giant is in a unique position to guide healthcare into a safer, more personalized, and more cost-effective endeavor,” she notes. With its biologics focus and innovative pipeline, we expect Roche to continue to achieve growth as its blockbuster drugs face competition.

Nike

• Market Capitalization: $125 billion
• Morningstar Price/Fair Value: 0.72
• Morningstar Style Box: Large Core
• Trailing 12-Month Yield: 1.76%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Footwear and Accessories

The largest athletic footwear brand in all major categories and all major markets, Nike dominates categories like running and basketball with popular shoe styles. We view Nike as the leader of the athletic apparel market and believe it will overcome current challenges, such as uneven demand for sportswear in key markets, argues Morningstar senior analyst David Swartz. Nike’s consumer plan is led by its Triple Double strategy to double innovation, speed, and direct connections to consumers. Although its recovery in China has been slow due to economic conditions, native competition, and a political controversy, we still believe Nike has a great opportunity for revenue growth there and in other emerging markets. Nike stock trades at a 28% discount to our fair value estimate of $117 per share.

Anheuser-Busch InBev

• Market Capitalization: $128 billion
• Morningstar Price/Fair Value: 0.73
• Morningstar Style Box: Large Core
• Trailing 12-Month Yield: 1.34%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Beverages—Brewers

Anheuser-Busch InBev has built a vast global scale and regional density through past acquisitions like Grupo Modelo and SABMiller. The brewer’s strategy is to buy brands with a promising growth platform, expand distribution, and ruthlessly squeeze costs from the business, observes Morningstar analyst Verushka Shetty. “AB InBev has one of the strongest cost advantages in our consumer defensive coverage and is among the most efficient operators,” she adds. The brewer’s free cash flow conversion has been consistently higher than peers’ in recent years, but it needs to continue to deleverage its balance sheet to reduce its earnings volatility. AB InBev stock trades 27% below our fair value estimate of $90 per share.

Sony

• Market Capitalization: $112 billion
• Morningstar Price/Fair Value: 0.77
• Morningstar Style Box: Large Core
• Trailing 12-Month Yield: 0.60%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Consumer Electronics

Over the past decade, Sony has transformed its business model to enable more solid and stable growth by reducing the volatility of the consumer electronics business and by aggressively investing in content for its entertainment businesses such as music, movies, and games, says Morningstar director Kazunori Ito. In the music and movie businesses, Sony has been able to seize growth opportunities such as the expansion of the streaming market, by expanding its content and exploring new artists. Sony stock trades 23% below our fair value estimate. We think Sony is worth $24.40 per share after a 5-for-1 stock split at the beginning of October.

Alphabet

• Market Capitalization: $2 trillion
• Morningstar Price/Fair Value: 0.77
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 0.24%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Internet Content and Information

Alphabet, the holding company of internet giant Google, joins our list of best blue-chip stocks to buy. With solutions ranging from advertising to cloud computing and self-driving cars, Alphabet has built itself into a true technology behemoth, generating tens of billions of dollars in free cash flow annually. While antitrust concerns around Alphabet’s core search business have made headlines, Morningstar analyst Malik Ahmed Khan argues that the firm will be able to navigate these headwinds and maintain its leadership position in search and text-based advertising in the long term. Alphabet stock is trading 23% below our fair value estimate of $209 per share.

Nestle

• Market Capitalization: $250 billion
• Morningstar Price/Fair Value: 0.81
• Morningstar Style Box: Large Core
• Trailing 12-Month Yield: 3.39%
• Morningstar Capital Allocation Rating: Standard
• Industry: Packaged Foods

Nestle is the largest food and beverage manufacturer in the world by sales. Its diverse product portfolio includes brands such as Nestle, Nescafe, Perrier, Pure Life, and Purina. Nestle faces competition from local operators, and past missteps have caused the firm to miss out on or be late to the latest consumer trends. However, current management has reversed past trends, says Morningstar analyst Diana Radu. Aside from structural cost-cutting efforts, the management team has successfully put a lot of weight on reinvigorating growth through active portfolio management, resetting legacy businesses, and further investment in high-growth categories (coffee, pet care, water, and nutrition). Nestle stock trades 19% below our fair value estimate of $116 per share.

Airbus

• Market Capitalization: $117 billion
• Morningstar Price/Fair Value: 0.84
• Morningstar Style Box: Large Growth
• Trailing 12-Month Yield: 1.29%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Aerospace and Defense

Airbus primarily generates revenue by manufacturing commercial aircraft. It benefits immensely from being in a duopoly with Boeing BA in the market for aircraft that have 130 seats and up; the companies act as a funnel through which practically all such commercial aircraft demand must flow, and we expect this duopoly to continue, says Morningstar analyst Nic Owens. Airbus is well-positioned to take advantage of increasing global commercial air travel. We think Airbus stock is worth $44 per share, and it is trading 16% below that.

Bristol-Myers Squibb

• Market Capitalization: $108 billion
• Morningstar Price/Fair Value: 0.85
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 4.50%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Drug Manufacturers—General

The third drug manufacturer on our list of the best blue-chip stocks to buy, Bristol-Myers Squibb stock is trading 15% below our fair value estimate of $63 per share. Adept at partnerships and acquisitions, Bristol-Myers Squibb has built a strong portfolio of drugs and a robust pipeline. The firm has brought in partners to share the development costs and diversify the risks of clinical and regulatory failure. “We believe the cardiovascular partnership with Pfizer represents one of the most important partnerships,” says Morningstar’s Andersen. Bristol is aggressively repositioning itself to expand through challenging patent losses. The recent approval of Karuna’s schizophrenia drug Cobenfy stands to generate multi-billion-dollar peak sales in neurology, which is now reestablished as a key focus for Bristol.

Microsoft

• Market Capitalization: $3 trillion
• Morningstar Price/Fair Value: 0.85
• Morningstar Style Box: Large Core
• Trailing 12-Month Yield: 0.72%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Software—Infrastructure

New addition Microsoft rounds out our list of the best blue-chip stocks to buy for the long term. Microsoft is one of two public cloud providers that can deliver a wide variety of PaaS/IaaS solutions at scale. It has also emerged as a leader in artificial intelligence because of its investment in OpenAI. Morningstar senior analyst Dan Romanoff sees Microsoft as a more focused company that offers impressive revenue growth with high and expanding margins. He argues that Azure is the centerpiece of the new Microsoft, as it is an excellent launching point for secular trends in AI, business intelligence, and Internet of Things. Even though we estimate it is already an approximately $75 billion business, Azure grew at an impressive 30% rate in fiscal 2024. Microsoft stock trades 15% below our fair value estimate of $490 per share.

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 capitalization.

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 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 capitalization 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 key word “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 that large-company funds and broad US stock index funds own blue-chip stocks, so you may not necessarily need a separate blue-chip fund if you already own a core stock fund.