SBUX - 2 Legendary Dividend Blue Chips Down 40% Worth Buying Now

2024-05-16 07:00:00 ET

Summary

• The US stock market is on the verge of a new record high, ending the pullback of 2023.
• Earnings of S&P 500 companies have been solid, beating profit expectations and contributing to potential double-digit returns.
• But even with stocks near record highs, legendary blue chips are down as much as 40%, including those of Starbucks and Jack Daniel's maker Brown-Forman.
• Starbucks has a solid plan to return to growth that analysts think should allow for 15% to 16% long-term returns and potentially 21% annually in the next five years.
• Brown-Forman is expected to boost earnings 30% in the next few years, potentially allowing the price to double by 2026. This dividend aristocrat is a perfect example of how even world-class dividend growth legends can become attractive bargains in a red-hot market.

The pullback of 2023 appears to be ending, with the US stock market on the verge of a brand-new record high.

Naturally, this brings many investors angst. After all, aren't corrections healthy?

Yes, absolutely. The average year for stocks, 76% of which are positive, sees a 14% peak decline. That means, in any given year, a 14% decline would be normal, healthy, and average, and not necessarily that another bear market is coming, much less the 65% super crashes that doomsday prophets keep predicting.

This Isn't A Bubble: It's Good Earnings

According to data compiled by Bloomberg, the 459 companies in the S&P 500 that have reported this quarter have posted profits on average 8.4% higher than expected. About 79% have beaten profit expectations, compared to 76% last quarter." - Bloomberg

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