For the first half of this year only very safe things went up: Bonds, Utilities, things people use every day like food. These areas soon became overvalued. Then in July the pendulum swung to growth stocks leading the charge and the safe stuff has declined 10% since.
Now where the true values lie is in Blue Chip stocks. Companies with strong franchises that can increase profits at double-digit rates by growing their businesses as they always have, making acquisitions, and buying back stock. Some even add in a dividend. The Blue Chips I cover also grow pretty good. I’m talking 10-20% a year including dividends.
In this month’s newsletter I’ve replaced the charts with Profit History tables. These show the numbers better, including historic P/E ratios. Stocks often have short-term ups-and-downs but often revert back to the mean. Here’s what I believe are the best Blue Chips on a dip.