The stock market is sliding lower in August, and volatility has returned to equities. So what’s an investor to do? The best defense in times like these is to put capital into reliable blue-chip stocks. These stocks of established, profitable companies generate plenty of free cash flow and have a proven track record of rewarding shareholders through stock performance or a combination of dividend payments and share buybacks.
Coming out of the second-quarter earnings season, some blue-chip stocks look better than others. These include several household names that perform well in any economic environment. While some stocks are overly susceptible to higher interest rates or an economic downturn, others have proven to be resilient in good times and bad. These are the ONLY three blue-chip stocks to consider in August 2023.
Walmart (WMT)
Walmart (NYSE:WMT) looks like a good bet after the world’s largest retailer crushed Wall Street estimates for its second-quarter financial results and raised its full-year guidance. Due to robust grocery sales and online spending, Walmart reported Q2 earnings per share (EPS) of $1.84 versus $1.71, which was expected on the Street. Revenue in the period totaled $161.63 billion compared to $160.27 billion, which was the consensus expectation among analysts who covered the company.
The Arkansas-based retailer said its e-commerce sales during Q2 rose 24% from a year earlier. Same-store sales increased 6.4% from a year ago. Looking ahead, Walmart now expects full-year sales to increase between 4% and 4.50%, and EPS for the year will range between $6.36 and $6.46. That compares with previous guidance for net sales of 3.50% and EPS of $6.10 to $6.20. Shares of Walmart have risen 10% since the start of the year. If not for the current market downturn, WMT stock would likely be higher after the Q2 print.
Berkshire Hathaway (BRK-A, BRK-B)
Never bet against Warren Buffett. The stock of Buffett’s holding company, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), recently closed at an all-time high after reporting exceptional second-quarter results. Berkshire’s Class A stock rose 3.4% to close at an all-time high of $551,920, beating the share’s previous high set in March 2022. Buffett’s company’s more affordable Class B stock increased 3.6% to hit a new record close of $362.58 a share. Berkshire’s Class B stock has now increased a total of 22% over the last 12 months.
The record highs were achieved after Berkshire Hathaway reported that its operating earnings rose 6.6% year-over-year to $10.04 billion in Q2 of this year. Berkshire also reported that its cash holdings reached nearly $150 billion in Q2, near record levels and much higher than the $130.62 billion reported in Q1. Earnings from the holding company’s insurance underwriting business rose 74%, helping to offset weakness in the BNSF railroad that Berkshire Hathaway owns.
Berkshire also impressed with a $26 billion unrealized gain from its investments, much of which was due to its $177.6 billion holding of Apple (NASDAQ:AAPL) stock. AAPL shares rose nearly 18% in Q2.
Home Depot (HD)
Retailer Home Depot (NYSE:HD) also just announced second-quarter financial results that beat Wall Street forecasts on both the top and bottom lines. The Atlanta-based home improvement company reported EPS of $4.65 versus the $4.45 that analysts anticipated. Revenue in the April through June period came in at $42.92 billion compared to $42.23 billion that had been forecast. The latest print marked the first time in three quarters that Home Depot beat Wall Street’s revenue expectations.
However, despite the strong showing, Home Depot maintained its muted guidance for the remainder of this year, saying it still expects comparable sales to decline between 2% and 5% from 2022 levels. Company executives said they continue to see cautious spending by consumers on big-ticket items such as appliances. As a result, comparable sales company-wide declined by 2% in Q2, marking the third consecutive quarter of falling sales.
Home Depot’s stock fell due to the guidance issued and is up only 3% on the year. Investors should view it as a buying opportunity. Especially as Home Depot just announced a new $15 billion share buyback program that takes effect immediately.
On the date of publication, Joel Baglole 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.