The Smartest Blue Chip Stocks to Buy With $2,000 Right Now

Motley Fool
Yesterday
  • Visa operates the world's leading payment network and benefits from strong network effects and robust profit margins.
  • Berkshire Hathaway has delivered excellent returns over the decades thanks to its diverse holdings.
  • Progressive delivered for investors in a big way, thanks to its underwriting ability in a highly competitive auto insurance industry.

Plenty of investors are seeing the market turbulence fueled by tariff-related uncertainties and feeling a bit uneasy about their portfolios. Concerns are growing that President Donald Trump's trade war could drag on consumer spending and hinder economic growth, further exacerbating the already significant stock volatility.

Some long-term investors are seeing the uncertainty and looking to take advantage, putting capital to work while discounts are to be found. For instance, now might be a great time to consider strong, blue chip stocks with well-established track records of impressive returns. These industry giants -- recognizable names that have consistently kept pace with the market -- command respect and, often, premium valuations.

For years, Visa (V 1.21%), Berkshire Hathaway (BRK.A 0.53%) (BRK.B 0.74%), and Progressive (PGR 2.57%) have provided investors with stellar returns, demonstrating resilience no matter what is thrown at them. If you have $2,000 (or any amount, really) available to invest long-term and it's not needed for monthly bills, to pay down short-term debt, or to bolster an emergency fund, these three blue-chip stocks could be excellent additions to your portfolio today. Here's why.

Image source: Getty Images.

Visa

Visa operates the world's second-most widely used payment network (Union Pay in China processes more transactions), processing an astounding $15 trillion-plus in transactions in 2023. That was 67% higher than the amount Mastercard handled that year, and eight times more than American Express.

What sets Visa apart is its well-established payment network, built over six decades. This vast infrastructure creates a loyal community of merchants, customers, and banking partners and gives Visa's business a strong network effect. With a broad customer base and strong trust among banks, Visa has become a preferred partner for institutions looking to launch credit or debit cards.

One of Visa's standout advantages is its business model, under which it doesn't assume any credit risk. Instead, its banking partners shoulder the responsibility of making credit card loans (and the risk that borrowers may default on them), while Visa earns its revenue from transaction processing fees. This approach allows Visa to thrive in a growing economy and positions it favorably during inflationary periods, as demonstrated by its robust growth in 2021 and 2022.

With low operational expenses and an impressive profit margin that outshines many in the financial services sector, Visa remains resilient, despite potential consumer spending slowdowns. This resilience makes Visa an appealing option for long-term investors looking for reliable growth. With its solid foundation and bright prospects, Visa is a standout buy-and-hold stock for the long haul.

Berkshire Hathaway

Berkshire Hathaway has long attracted investor attention, thanks to the unparalleled leadership and investment acumen of its legendary CEO, Warren Buffett. Since he took the helm in 1965, the company has astounded shareholders with nearly 20% annualized returns.

Even when we examine performance starting from 2000, Berkshire has achieved an impressive 11.1% compound annual return, well outpacing the S&P 500's 7.3% annualized return during the same timeframe.

What truly sets Berkshire Hathaway apart is the vast empire of subsidiaries that Buffett and the late Charlie Munger meticulously built over the decades. As a conglomerate, Berkshire excels not only in stock investments but also in outright acquisitions.

Berkshire's insurance segment, which provides nearly half of the company's operating earnings, is particularly noteworthy. With heavyweights like GEICO, National Indemnity, Berkshire Hathaway Reinsurance, and Alleghany under its umbrella, Berkshire's insurance businesses thrive on a robust cash reserve and consistent investment income from higher-yielding U.S. Treasuries.

The company's wholly owned subsidiaries also include companies in a wide range of industries, including energy, railroads, consumer goods, building supplies, and more. Its strategy of investing in quality companies with strong management teams underscores Berkshire's long-term approach to investing.

Currently flush with more than $334 billion in cash and short-term investments, Berkshire is well-positioned to seize opportunities that may arise amid market volatility. For investors seeking a resilient and diversified powerhouse with a strong cash position, Berkshire Hathaway stands out as a compelling buy today.

Progressive

Progressive is the second-largest auto insurance provider in the United States, just behind State Farm. What distinguishes it from its rivals is its exceptional underwriting prowess, honed over decades. By leveraging telematics and a data-driven approach, the company has built a reputation for consistently maintaining profitable insurance policies.

At the core of Progressive's strategy is a long-established commitment to earning at least $4 in profit for every $100 in premiums written. This steadfast focus on underwriting profitability has created a solid foundation for growth and resilience in a fiercely competitive industry.

Today, Progressive is reaping the rewards of its disciplined approach and is also benefiting from the higher-interest-rate environment. The company boasts a substantial investment portfolio -- a natural advantage in the insurance sector, where premiums are collected up front while claims are paid out later. This allows Progressive -- like its peers -- to invest its float to capitalize on higher interest rates, boosting its investment income in the process.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10