7 Top Blue-Chip Stocks for the Rest of 2021

Stocks to buy

It’s the news that everyone was anticipating. Nevertheless, the strength of the March 2021 jobs report caught even some optimists by surprise. Hiring surged in the U.S. as employers added 916,000 jobs in March, representing the best gain since August of last year. Despite the enthusiasm, though, investors should continue eyeballing blue-chip stocks to buy.

While that seems awfully pessimistic given the latest news, the economic recovery is far from over. First, as the Wall Street Journal pointed out, we still have 8.4 million fewer jobs than in February 2020 — right before the novel coronavirus pandemic completely shattered our paradigm. So until we truly get back on track, we probably shouldn’t pop open the champagne and ignore safe blue-chip stocks.

Second, the recovery narrative naturally bolsters the inflation argument, which may cause politicians and central bankers to adopt a hawkish stance on fiscal and monetary policies. In my opinion, this may be the wrong course of action. Key data points such as money velocity — or the rate of circulation of each unit of currency in the economy — indicates that we have systemic deflation, not inflation.

Third, recent news events show how unpredictable life can be. So while you may want to take some risks, it’s important to at least consider these blue-chip stocks for more stable exposure to the markets.

That said, these seven look like good candidates.

  • China Southern Airlines (NYSE:ZNH)
  • Alibaba (NYSE:BABA)
  • Olin Corporation (NYSE:OLN)
  • Becton Dickinson (NYSE:BDX)
  • Sony (NYSE:SONY)
  • Microsoft (NASDAQ:MSFT)
  • Mastercard (NYSE:MA)

However, before we dive in, it’s important to be vigilant. Whether you’re interested in blue-chip stocks or are looking to gamble on speculative fare, let rational thinking, not emotional urges, be your guide.

China Southern Airlines (ZNH)

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Among blue-chip stocks, China Southern Airlines is one where I’m plugging my nose as I write these words. Prior to the novel coronavirus pandemic, ZNH stock made perfect sense. According to OurWorldinData.org, tourism from Asia has become a force to be reckoned with, second only to tourism from Europe. Chinese tourists in particular have driven this eastern tailwind.

Then, the coronavirus happened, and the sentiment isn’t such a bright one anymore. Given the terrible social injustices that have occurred in the U.S., it’s difficult to imagine that Chinese tourists have great feelings about visiting. Instead, what I believe will happen is an increase in Chinese domestic travel, as well as regional travel in Asia.

We may already be seeing evidence of this. In 2020, China Southern Airlines generated revenue of $14.15 billion, down 36%. That’s a massive drop. However, compare that to United Airlines (NASDAQ:UAL), Delta (NYSE:DAL) and Spirit Airlines (NYSE:SAVE), which were down 68.7%, 65%, and 52.7%, respectively, in 2020.

In other words, there is a credible argument that ZNH stock could recover faster than other airline blue-chip stocks.

Alibaba (BABA)

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For blue-chip stocks levered to the broader retail sector, I don’t think you can go wrong with Amazon (NASDAQ:AMZN). However, if you’re looking for greater upside potential, I’m going to give the nod to Alibaba. Personally, I’d rather not. Being China’s flagship company, the present geopolitical tensions make BABA stock an uncomfortable investment, to put it diplomatically.

But the numbers don’t lie — maybe that was a bad analogy but you know what I’m saying! For the quarter ended Dec. 31, 2020, Alibaba generated $33.8 billion, which was up nearly 37% from the year-ago level. On a trailing-12-month basis, the company rang up $98.04 billion. To put this into context, even with just the first three quarters of the company’s fiscal 2021, the total will exceed 2020’s tally by nearly 8%.

Again, BABA stock probably isn’t going to win popularity contests in some circles, but this is a type of dominance that you can’t ignore. This of course is a result of China cracking down hard on the novel coronavirus, so much so that when Reuters mentions an uptick in cases, we’re talking about double-digit figures — not five or six.

Olin Corporation (OLN)

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Over the last few months, I’ve adopted a cautious tone on the U.S. economy. Of course, with the latest jobs report that greatly exceeded expectations, I appear unduly pensive. I’ll take that criticism because I still have questions about the recovery. If you compare the employment level of March 2021 to February 2020 (just before the crisis), we’re still down 5%.

Nevertheless, if the economy continues to beat expectations, then you’d imagine that Olin Corporation, a leading company of chemical goods, will outperform. That’s because Olin’s services are vital to the supply chain of various industries. If we recover, OLN stock will be in prime position. Indeed, many investors are anticipating exactly that given the share performance.

But even if we have utter chaos, OLN stock should perform surprisingly well. As you may know, the underlying company owns the Winchester brand of ammunition. This is extremely significant because gun manufacturers like Smith & Wesson Brands (NASDAQ:SWBI) enjoyed robust demand in the third quarter with the help of a number of first-time gun buyers.

So, yes, this is one of the most cynically driven blue-chip stocks — but that’s the reality we’re living in.

Becton Dickinson (BDX)

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As one of the top medical equipment firms, Becton Dickinson is always a solid name to include in your portfolio of blue-chip stocks. Certainly, the time for making outsized gains on BDX stock is over. This isn’t about getting rich. Instead, Becton Dickinson keeps you on the straight and narrow while enjoying a pedestrian but reliable dividend yield.

However, the company earlier received a jolt of relevance as syringe shortages became yet another bottleneck for the coronavirus vaccine rollout. Don’t get me wrong — overall, our vaccination program produced encouraging results. But it’s not lost on many analysts that it could have been better. Still, Becton Dickinson is one of the beneficiaries — ramping up production to meet demand.

Furthermore, I see BDX stock gradually moving higher because I’m becoming somewhat skeptical that the coronavirus crisis is nearing its end. Having looked at the latest data from the Centers for Disease Control and Prevention (CDC), new cases are already a bit higher from this year’s low.

Hopefully, it means nothing. But if we do have a resurgence, BDX is one of the blue-chip stocks to keep in mind.

Sony (SONY)

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Onto more pleasant news, Sony is one of my favorite blue-chip stocks for three reasons. First, I used to work there and learned the skills and discipline required to write compelling content at scale thanks to the consumer electronics giant. Second, SONY stock is incredibly relevant because of its ties to the soaring video game market. Third and most importantly, I own shares.

Okay, maybe that point isn’t the most important (but it’s important to me). Among the blue-chip stocks that you can trust for the rest of this year, I have the highest confidence in SONY stock. As you know, demand for its PlayStation 5 console is through the roof. No pandemic and no global chip shortage is going to quell this demand.

Indeed, you could make the argument that supply chain disrupts to the PS5 have driven up demand even more. That’s because consumers on the fence about the gaming console might buy it simply because they don’t know when the next disruption might be. In this crazy year we’ve had, it almost seems inevitable that something nasty is over the horizon.

Plus, entertainment has been very resilient, so this is one to keep close tabs on.

Microsoft (MSFT)

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You probably won’t find too many technology-based blue-chip stocks as boring as Microsoft, but I consider this to be a wonderful attribute.

MSFT stock plays into the most relevant initiative of the hour: work from home. Millions of worker bees basically enjoyed a year-long staycation (or vacation at the boss’ expense). Now, major corporations are welcoming back some of their employees to the cubicles.

It might seem like a drag to go back to work. However, some people enjoy the physical camaraderie that can only come from a person-to-person environment. Also, it’s nice to have a clear delineation between one’s professional and personal life.

For better or for worse, we may be working from home for longer than initially anticipated. If so, Microsoft’s cloud-based solutions have made a serious impact which should serve MSFT stock well into the future.

Mastercard (MA)

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Probably the most controversial and riskiest of the blue-chip stocks on this list, credit card giant Mastercard may enjoy hearty upside throughout this year. Should Covid-19 cases decline due to stronger vaccination efforts, then consumers may exercise their pent-up demand and go on shopping sprees.

To be clear, I think this idea is bonkers. Over the trailing year, we’ve suffered a deadly pandemic, catastrophic storms and global supply chain shortage due to blockage of the Suez Canal.

You don’t think the universe is trying to tell us something?

Anyways, I do understand that Americans have been cooped up at home and want to engage in the consumer activities that they were denied last year. The ridiculously high personal saving rate suggests a wealth of cash waiting to strike at cheap Chinese goods.

Still, keep in mind that work from home is a deflationary initiative (productivity up, overhead costs down and wages flat). Deflation tends to signal downturns, not upswings. Also, one more catastrophe or disruption to consumer sentiment could sink MA stock.

On the date of publication, Josh Enomoto held a long position in SONY.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.