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 ASX 20 or 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-capitalisation 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 (see end of article for definitions) 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 US blue-chip stocks to buy for the long term

These are the largest firms by market cap on Morningstar’s Best Companies to Own list whose stocks were at least 14% undervalued as of 6 January 2025.

  1. Anheuser-Busch InBev BUD
  2. Pfizer PFE
  3. Roche RHHBY
  4. Nike NKE
  5. Nestle NSRGY
  6. Sanofi SNY
  7. Danaher DHR
  8. Merck MRK
  9. Thermo Fisher Scientific TMO
  10. Bristol-Myers Squibb BMY

Here’s a little bit about each of these blue-chip stocks for the long term. 

Anheuser-Busch InBev BUD

  • Market Capitalisation: $105 billion
  • Morningstar Price/Fair Value: 0.55
  • Morningstar Style Box: Large Core
  • Trailing 12-Month Yield: 1.66%
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Beverages—Brewers

Anheuser-Busch InBev is the most undervalued company on our list of best blue-chip stocks to buy. It 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 45% below our fair value estimate of $90 per share.

Pfizer PFE

  • Market Capitalisation: $143 billion
  • Morningstar Price/Fair Value: 0.60
  • Morningstar Style Box: Large Value
  • Trailing 12-Month Yield: 6.65%
  • Morningstar Capital Allocation Rating: Standard
  • Industry: Drug Manufacturers—General

Pfizer is the first of seven healthcare companies that made our list of the best blue-chip stocks to buy, and it offers the highest trailing yield of the group. A household name among drug manufacturers, Pfizer’s stock is currently trading at a 40% 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 RHHBY

  • Market Capitalisation: $231 billion
  • Morningstar Price/Fair Value: 0.64
  • Morningstar Style Box: Large Core
  • Trailing 12-Month Yield: 3.80%
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Drug Manufacturers—General

Roche stock trades 36% 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 personalised, and more cost-effective endeavour,” she notes. With its biologics focus and innovative pipeline, we expect Roche to continue to achieve growth as its blockbuster drugs face competition.

Nike NKE

  • Market Capitalisation: $115 billion
  • Morningstar Price/Fair Value: 0.66
  • Morningstar Style Box: Large Core
  • Trailing 12-Month Yield: 1.96%
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Footwear and Accessories

Nike is one of only three nonhealthcare companies on our list of best blue-chip stocks. 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 34% discount to our fair value estimate of $117 per share.

Nestle NSRGY

  • Market Capitalisation: $215 billion
  • Morningstar Price/Fair Value: 0.71
  • Morningstar Style Box: Large Core
  • Trailing 12-Month Yield: 3.96%
  • 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 29% below our fair value estimate of $116 per share.

Sanofi SNY

  • Market Capitalisation: $117 billion
  • Morningstar Price/Fair Value: 0.77
  • Morningstar Style Box: Large Core
  • Trailing 12-Month Yield: 4.44%
  • Morningstar Capital Allocation Rating: Standard
  • Industry: Drug Manufacturers—General

Sanofi’s wide lineup of branded drugs and vaccines and robust pipeline create strong cash flows and a wide economic moat. Growth of existing products and new product launches should help offset upcoming patent losses, says Morningstar senior analyst Jay Lee. Sanofi’s existing product line boasts several top-tier drugs, including immunology drug Dupixent. A history of acquisitions and robust cash flow from operations mean Sanofi could take advantage of further growth opportunities through external collaborations. We expect the firm’s acquisition focus on immunology drugs and rare disease drugs will continue following several deals in this area. Sanofi stock trades 23% below our fair value estimate of $63 per share.

Danaher DHR

  • Market Capitalisation: $169 billion
  • Morningstar Price/Fair Value: 0.83
  • Morningstar Style Box: Large Core
  • Trailing 12-Month Yield: 0.45%
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Diagnostics and Research

Medical technology company Danaher joins our list of best blue-chip stocks to buy after Morningstar analysts upgraded the firm’s moat rating to wide from narrow. The firm offers differentiated technology that is protected by various intangible assets, including patents, brands, copyrights, and trademarks, observes Morningstar senior analyst Julie Utterback. Danaher seeks out attractive markets and makes acquisitions to enter or expand within those fields, and it also divests assets that are no longer core to the business. The company’s acquisition-focused strategy has contributed to it becoming a top-five player in the highly fragmented and relatively sticky life science and diagnostic tool markets. Danaher stock trades at an 17% discount to our fair value estimate of $285 per share.

Merck MRK

  • Market Capitalisation: $253 billion
  • Morningstar Price/Fair Value: 0.83
  • Morningstar Style Box: Large Value
  • Trailing 12-Month Yield: 3.12%
  • Morningstar Capital Allocation Rating: Standard
  • Industry: Drug Manufacturers—General

Merck’s combination of a wide lineup of high-margin drugs and a pipeline of new drugs should ensure strong returns on invested capital over the long term, says Morningstar’s Andersen. After several years of mixed results, Merck’s R&D productivity is improving as the company shifts more toward areas of unmet medical need. Merck’s new products have mitigated the generic competition, offsetting recent major patent losses. In particular, Keytruda for cancer represents a key blockbuster with multi-billion-dollar potential. We expect Keytruda’s leadership in non-small cell lung cancer and several other cancers will be a key driver of growth for the firm over the next several years, but the 2028 US patent loss on the drug will create eventual pressure. Merck stock is trading 17% below our fair value estimate of $120 per share.

Thermo Fisher Scientific TMO

  • Market Capitalisation: $203 billion
  • Morningstar Price/Fair Value: 0.85
  • Morningstar Style Box: Large Value
  • Trailing 12-Month Yield: 0.29%
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Diagnostics and Research

Thermo Fisher is weathering the pullback in global biopharmaceutical spending better than most of its peers. Being the premier life science supplier and having an unmatched portfolio of products, resources, and manufacturing capabilities have allowed the firm to retain and grow its wallet share among its customers across all channels, observes Morningstar regional director Alex Morozov. We expect the current budget-constrained environment to slowly ease in the upcoming year. The firm remains in a great position to leverage its share gains in the biopharma channel and capitalize on strong long-term demand. Thermo Fisher stock is trading at a 15% discount to its fair value estimate of $630.

Bristol-Myers Squibb BMY

  • Market Capitalisation: $113 billion
  • Morningstar Price/Fair Value: 0.86
  • Morningstar Style Box: Large Value
  • Trailing 12-Month Yield: 4.30%
  • Morningstar Capital Allocation Rating: Exemplary
  • Industry: Drug Manufacturers—General

Rounding out our list of the best blue-chip stocks to buy for the long term, Bristol-Myers Squibb stock is trading 14% below our fair value estimate of $66 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.

 

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Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company's future cash flows, resulting from our analysts' independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.

Uncertainty Rating: Morningstar’s Uncertainty Rating is designed to capture the range of potential outcomes for a company. An investor can think of this as the underlying risk of the business. For higher risk businesses with wider ranges of potential outcomes an investor should consider a larger margin of safety or difference between the estimate of what a share is worth and how much an investor pays. This rating is used to assign the margin of safety required before investing, which in turn explicitly drives our stock star rating system. The Uncertainty Rating is aimed at identifying the confidence we should have in assigning a fair value estimate for a stock. Read more about business risk and margin of safety here.