Recent reports show the U.S. gross domestic product (GDP) grew at an annual rate of 2.4% from April to June 2023, a faster rate than formerly predicted. The economy is shaping out to be even more resilient to avoid a recession this year.
UCLA Anderson Forecast predicts two possible paths for the economy. Either growth will slow down before picking up again, or a short recession will occur from the Q3 of 2023 to the Q1 of 2024. Despite these uncertainties, consumers are still spending and businesses continue to invest. The possibility of a recession in late 2023 will hinge on factors like inflation, employment conditions, and the Federal Reserve response.
With shaky macroeconomic backdrops, beginners are better off sticking with these three blue chips that can hold growth in portfolios.
Alphabet Incorporated (GOOGL)
Alphabet Incorporated (NASDAQ:GOOG NASDAQ:GOOGL) is an American multinational technology conglomerate, primarily recognized among consumers for Google. GOOGL is up 43.75% YTD at $128.11. Also, 47 analysts have predicted a 12-month median-high price range of $150 to $200 or a 17.1% to 56.1% upside from its current price alone.
The technology market overall boasted a market size of $8.51 trillion in 2022. Though many are anticipating Google’s plateau, the projections still anticipate the industry to soar to $11.47 trillion by 2026. That would showcase a robust 7.75% CAGR from 2022 to 2026. Google’s massive variety of offerings spanning from EVs to entertainment gives it growth potential in all verticals.
In recent years as revenue has slowed down, GOOGL has been improving its profitability and returning more cash back to investors. It has an above-average levered FCF margin of 23.57%, and FCF is up 33.65% YoY.
Google’s growth is being propelled by strategic AI integration, partnerships, and diversified revenue streams. In the Cloud segment, collaborations with DataStax and Omnicom aim to enhance customer engagement and reignite growth. Google’s dominance in Search and its advertising business continues to generate an impressive amount of cash flow. And it’s further amplified by its leadership in AI applications. Finally, YouTube’s recent success in Shorts and Connected TV is making it more attractive to advertisers.
With Alphabet’s relentless focus on AI-driven innovation and strong financials, GOOGL presents an enticing opportunity for beginner investors.
Tesla Incorporated (TSLA)
Tesla Incorporated (NASDAQ:TSLA) is a leading automotive and energy company. Tesla stands out for its unique business model that runs on direct sales, as selling energy generation and storage systems amounted to $4 billion in 2022 revenue alone.
TSLA stock is up 134% year-to-date. The latest earnings results are strong, as revenue of $24.93 billion is up 47.2% YoY which beat expectations by $200.35 million. Diluted EPS of $0.78 is up 20%, and net income of $2.7 billion is up 19.65%, representing strong growth in financials. Furthermore, Yahoo! Finance reports 36 analysts having a 1-year mean price target for TSLA stock to be $213.84, with the range being a low of $22.06 and a high of $317.42.
A dominator of the EV market, Tesla continues to have multiple growth catalysts in the foreseeable future. In November 2019, the heavily-awaited release of its Cybertruck, with its unique and powerful design, interested millions of consumers. An additional forecast projects sales of 250,000 to 500,000 vehicles each year.
In the backdrop, the growing EV market will continue to be a tailwind for Tesla. Notably, the market is forecast to increase from $500 billion in 2023 to $1,579 billion by 2030 on 17.8% CAGR.
With a bright road ahead and a history of strong financial success, TSLA stock is a long-term investment that will undeniably grow any beginner’s portfolio.
Amazon Incorporated (AMZN)
Amazon Incorporated (NYSE:AMZN) is an American multinational technology company. AMZN stock has had a run-up this year and increased 62.63% YTD. Analysts are conflicted on its path with ratings by 46 analysts compiled by Yahoo! Finance having a 1-year mean price target of $130.85. Their ranges span as low as $89.78 to as high as $163.24.
Amazon’s biggest growth catalyst is the recent unveiling of the Buy with Prime program. This program provides independent e-commerce platforms to add Amazon Prime to its website and converts Amazon Prime members into customers.
Additionally, Amazon’s focus on incorporating artificial intelligence (AI) and machine learning (ML) provides a convenient and personalized shopping experience for millions of customers worldwide. With upward climb in the entertainment, clothing, healthcare, and food businesses and acquisition of Freevee and Twitch, Amazon anticipates a 2024 estimated sales growth of 11.5%. AMZN is a standout as a safe, reliable first investment stock.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
