2023-07-25 07:00:00 ET
Summary
- There are plenty of smart long-term opportunities even in stupid markets.
- Growth at a reasonable price is always available if you know where to look.
- Ameriprise is one of our favorite time-tested blue chips, having delivered 17% annual returns for our members since we recommended it in September 2019.
- Today, AMP still offers a highly attractive 0.7 PEG ratio courtesy of a low 11.7 PE and a red-hot growth outlook of almost 17%. It has a 43% upside potential over the next 1.5 years.
- Amazon has been a coiled spring for years, and finally, the market has woken up to the most obvious hyper-growth Super GARP story on Wall Street. Even up 60% YTD, Amazon may have 143% upside potential over the next 1.5 years, a stunning 43% annual return potential that makes it a no-brainer blue-chip bargain buy.
A lot of investors are worried about buying anything right now.
And that's understandable.
It sure doesn't feel smart to be buying stocks right now.
Recession, the Fed still hiking rates, geopolitical instability, there are so many reasons it just feels smarter to hide in cash.
But the data is clear that as long as your time horizon is at least 18 months, and it really should be much longer than that, stocks are the place you want to be.
I know what you're thinking, "stop quoting me statistics, you darned Vulcan! We're not all creatures of pure logic!"
Here are two no-brainer blue-chip buy recommendations to help you stay smart in this really stupid market.
Two growth at a reasonable price or GARP blue-chip buys that can help you safely put your money to work while feeling confident in A-rated world-class companies you already trust.
These are companies that I've been recommending for years and that, for patient investors, have most definitely paid off.
I recommended Amazon on Dec. 3
We recommended Ameriprise in September 2019
Ameriprise Financial ( AMP ): A Smart Call In A Stupid Market
Further Reading
Why AMP Is A Great Buy Today
How do we know AMP is built to last? How can we recommend it before a likely recession next year?
Ameriprise traces its roots back to 1894, when it was founded by John Tappan in Minneapolis.
This financial service company has survived and thrived through:
- 25 recessions
- five depressions
- seven killer pandemics
- the Spanish Flu pandemic
- two world wars
- inflation as high as 22%
- interest rates as high as 20%
- over 27 bear markets
In 2005 American Express, which acquired Ameriprise in 1984, spun it out as a separate company. AMP began paying a dividend and has been growing it every year since then.
- 13% annual dividend growth
- 17-year dividend growth streak
The firm provides financial planning, asset management, and insurance services to individuals, businesses, and institutions.
Ameriprise Credit Ratings
Rating Agency | Credit Rating | 30-Year Default/Bankruptcy Risk | Chance of Losing 100% Of Your Investment 1 In |
S&P | A- Stable Outlook | 2.50% | 40.0 |
Fitch | A- Stable Outlook | 2.50% | 40.0 |
Moody's | A3 (A- equivalent) Stable Outlook | 2.50% | 40.0 |
AMBest | A- Stable Outlook | 2.50% | 40.0 |
Consensus | A- Stable Outlook | 2.50% | 40.0 |
(Sources: S&P, Fitch, Moody's, AMBest)
It's a fast-growing A-rated dividend growth powerhouse trading at a very attractive valuation despite delivering 27% annual returns since September 2019, when we first recommended it.
- PE: 11.7
- growth consensus: 16.9%
- PEG ratio: 0.70
Fundamental Summary
- DK quality score: 89% low risk 13/13 Ultra SWAN
- DK safety score: 93% very safe dividend (1.35% dividend cut risk in severe recession)
- Historical fair value: $418.97
- Current price: $353.87
- Discount to fair value: 16%
- DK rating: potential good buy
- Yield: 1.5%
- Long-term growth consensus: 16.9%
- Consensus long-term return potential: 18.4%
Ameriprise 2025 Consensus Total Return Potential
Amazon ( AMZN ): Red Hot Market Darling With Room To Run
Further Reading
Why AMZN Is A Great Buy Today
For years I've been pointing out that Amazon was a coiled spring and that it was just a matter of time before Wall Street caught on.
That time is finally here, but this coiled spring has plenty of room to run.
Amazon Medium-Term Growth Consensus
Metric | 2022 Growth | 2023 Growth Consensus (Recession) | 2024 Growth Consensus | 2025 Growth Consensus |
Sales | 11% | 8% | 11% | 12% |
EPS | -108% | 685% | 70% | 38% |
Operating Cash Flow | 2% | 56% | 32% | 23% |
Free Cash Flow | -16% | 228% | 76% | 61% |
EBITDA | -18% | 124% | 19% | 21% |
EBIT (operating income) | -45% | 65% | 57% | 41% |
(Source: FAST Graphs, FactSet)
Amazon's growth is back to explosive mode, and that's just the short-term outlook.
Year | Sales | Free Cash Flow | EBITDA | EBIT (Operating Income) | Net Income |
2022 | $513,983 | -$11,569 | $73,583 | $12,249 | -$2,722 |
2023 | $559,868 | $18,550 | $84,343 | $22,249 | $16,758 |
2024 | $626,791 | $36,972 | $102,495 | $35,040 | $27,940 |
2025 | $704,111 | $58,636 | $122,590 | $50,647 | $41,376 |
2026 | $786,454 | $86,984 | $156,359 | $70,823 | $57,152 |
2027 | $869,081 | $105,638 | $180,947 | $84,829 | $69,233 |
2028 | $977,738 | $130,250 | $210,003 | $108,884 | $89,331 |
Annualized Growth 2022-2028 | 11.31% | 47.67% | 19.10% | 43.93% | 39.75% |
Cumulative 2023-2028 | $3,964,175 | $437,030 | $856,737 | $372,472 | $301,790 |
(Source: FAST Graphs, FactSet)
This isn't just one of the largest companies on earth. It's an AA-rated hyper-growth tech titan leading the way in cloud computing and online marketing. It is expected to become the first $1 trillion sales company by the end of the decade.
Amazon: The Ultimate GARP Name
- price/cash flow: 18.1
- growth consensus: 43.1% (47% through 2028)
- PEG ratio: 0.42
Fundamental Summary
- DK quality score: 99% low risk 13/13 Ultra SWAN
- DK safety score: 100% (0.51% 30-year bankruptcy risk, 68th LT risk management percentile)
- Historical fair value: $218.97
- Current price: $130.00
- Discount to fair value: 41%
- DK rating: potential ultra-value buy (Buffett-style "fat pitch."
- Yield: 0%
- Long-term growth consensus: 43.1%
- Consensus long-term return potential: 43.1%.
Amazon 2025 Consensus Total Return Potential
What more do I need to say? Amazon is a red-hot growth name that's still a classic growth-at-a-reasonable-price stock.
Buffett-like return potential from a blue-chip bargain hiding in plain sight? That's how we roll, even in a very stupid and dangerous market.
Bottom Line: Ameriprise and Amazon Are No Brainer Blue-Chip Bargain Buys
If you're not willing to own a company for 10 years don't even think about owning it for 10 minutes." - Warren Buffett
Markets can be frustrating, scary, and even drive you just a bit crazy.
I Promise You're Not The Crazy One
It's easy to quote Buffett or any famous investor and drown you in charts and tables, proving that "time in the market, not timing the market" is the road to riches and retiring safely and splendor.
Don't get me wrong. I have charts, tables, and enough facts to drown a horse if that's what you want.
But I think that ultimately what you want from me is to know that the world hasn't gone completely crazy, and that you're not being reckless by not joining Robert Kiyosaki in his doomsday bunker.
I can't tell you what the stock market will do in the short term. I can only give you the probability curves.
I can't tell you what the economy will do this year, just provide you with the best available data on what it's likely to do.
And I can't guarantee any individual stock will go up or down in the short-term because that's not how the world works.
But I can tell you that world-class companies like Ameriprise and Amazon are the kind of A-rated (or AA-rated) Ultra SWAN bargain buys you can trust.
They are classic growth-at-a-reasonable-price Ultra SWANs who have proven they can handle a recession like what's likely coming in 2024.
They are the kinds of companies you can buy for the long-term, so that if your friend tells you "you're being reckless buying anything right now," you can reply.
"I'm being reckless responsibly."
Buying companies that are still highly to outrageously undervalued with the potential for 16% to 43% annual returns over the next 1.5 years.
When the rest of the market trusts in the hype, we trust in math.
When the rest of the market loses its mind, we stay sane, safe, and rational.
When the rest of the market goes crazy over Tesla (TSLA) and NVIDIA (NVDA)? We tell you the smart call is to buy Ameriprise and Amazon.
No matter how dangerous, reckless, or downright stupid in any market, there's always something smart to buy.
And today, Amazon and Ameriprise are just two out of many wonderful "anti-stupid" options you can choose from.
For further details see:
No Brainer Blue-Chip Bargain Buys