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In the last three months, the S&P 500 (SPX) went down 9.63% as the benchmark of the stock market. This is unsurprising, as the Dollar Strength Index (DXY) went up 4.42% during the same period. Although not always, these indices tend to be inversely proportional. 

Concerns about the USG’s financial health have sent the bond market into a spiral this month. 10-year Treasury bonds are down 46% since March, while 30-year bonds are down 53%. This massive selloff caused the 10-year US Treasury yield to breach 5% last week for the first time since the Financial Crisis of 2007 – 2009. 

Like now, the SPX went down while the DXY went up as higher bond yields led to a stronger dollar. In turn, the newly issued bonds offer a safe haven target for investors while riskier assets, such as stocks, undergo sell-off pressure. 

This translates to blue chip stocks under a heavy discount. Regardless of the current bond market turmoil, these companies have a solid history of profitability, making them resilient to macro-cycles. The question is, which blue-chip stocks to pick right now?

Qualcomm (Nasdaq: QCOM)

Even without AI, chipmakers are right behind food and energy in importance to keep the modern civilization going. Based in Taiwan, Qualcomm has a strong market position as a mobile chipmaker. Although on a downturn in the US smartphone chip market, Qualcomm maintains 47% of the pie as of last year. 

Globally, the company has a 28% market share in the application processor (AP) market, just behind the leading MediaTek at 31%. Nonetheless, Qualcomm still dominates the premium segment, increasing its shipments in Q2 2023 after Samsung flagship smartphones adopted Snapdragon 8 Gen 2 chips.

Alongside chipmaking, Qualcomm has diversified across 5G, AI, and ML (machine learning). Qualcomm Ventures launched a $100 million AI fund in startups while heavily investing in Californian OmniML to “enable AI everywhere.” 

In Q3 2023, Qualcomm beat earnings per share (EPS) at $1.87 vs the expected $1.81 by Refinitiv consensus. Its revenue fell just off the mark, at $8.44 billion vs $8.5 billion forecasted. However, due to the slow China recovery, Qualcomm sales for its QCT processor division are down 24% year-over-year.

Although sensitive to economic cycles, Qualcomm is now a “strong buy,” according to 25 analyst inputs pulled by Nasdaq. The average QCOM price target is $133.52 vs the current $106.36 per share. The high estimate is $150, while the low estimate is not far from the present price, at $100. 

Disney (NYSE: DIS)

The entertainment juggernaut has become more controversial in recent years, often becoming the center of the political divide. However, recent moves suggest that Disney is turning away from being politically committed. Specifically, Disney’s $330 million live-action Snow White reboot is heading for a full 1-year delay after a negative backlash.

Nonetheless, despite being vulnerable to public reception, Disney has an ample portfolio to power through. It covers the entire media/entertainment complex, from ABC, ESPN, National Geographic, and Pixar to Hulu, Marvel Entertainment, and Lucasfilm, to name a few. For Q3 2023, Disney reported 4% revenue growth to $22.33 billion, while nine-month growth reached 8%. 

Disney Parks, Experience, and Products division increased its revenues by 13% to $8.4 billion, with an accompanying operating income increase of 11% to $2.4 billion. At the same time, revenues for the Disney Media and Entertainment Distribution division remained flat. This may change positively after resolving a dispute with Charter Communications (NASDAQ: $CHTR), the second-largest cable TV company, over distribution fees.

Despite posting a $460 million net loss, Disney’s adjusted EPS ended at $1.03 per share vs 95 cents expected. Analysts attribute this to significant streaming restructuring costs, while Disney’s bottom line remains sound.

Based on 28 analyst inputs from Nasdaq, DIS stock is now a “strong buy.” The average DIS price target is $106.43 vs the current $80.17 per share. The high estimate is $128, while the bottom is $71.

Anheuser-Busch InBev (NYSE: BUD)

Even more controversial than Disney, Anheuser-Busch still maintains its position as the world’s largest brewer by volume. Despite the severe taint sparked by the Bud Light marketing kerfuffle, BUD beat the EPS estimate of $0.68 by $0.04 in Q2 2023, at $0.72 earnings per share.

The brewer has beaten most EPS estimates over the last two years at 75% win percentage. No doubt, the marketing debacle contributed to an 84.46% year-over-year decline in net income for Q2, at $339 million. However, the public tends to have a short memory, making boycotts likely to fizzle against BUD’s amply diversified portfolio of over 400 beer brands.

Investors should take note of the brewer’s next earnings drop on October 31st. The consensus EPS estimate for the quarter is $0.81 per share. In the meantime, ten analysts pulled by Nasdaq place the BUD stock as a “strong buy.”

The average BUD price target is $69.73 vs the current $54.02 per share. The high estimate is $76, while the low estimate is above the current bottom at $66.3. If the expectations are beaten tomorrow, the bottom will not likely stay this low for much longer.

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