3 Top Blue-Chip Stocks to Buy and Hold for 2025

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The undervalued stocks of these reliable large companies look attractive today.

00:00 Introduction
00:43 Microsoft MSFT
01:29 Pepsi PEP
02:16 Danaher DHR

I’m Susan Dziubinski with Morningstar. Investors often own blue-chip stocks at the core of their portfolios. What are blue-chip stocks? Blue-chip stocks are the stocks of large, well-established, and financially sound companies that are leaders in their industries. They’re often considered less risky, given their financial stability.
So today, we’re looking at three undervalued blue-chip stocks to buy and hold, taken from Morningstar’s Best Companies to Own list. Our Best Companies to Own list includes companies with significant competitive advantages—or what we call wide economic moats. The stocks we’re focusing on today from that list are undervalued and have market capitalizations greater than $100 billion.
Our first undervalued blue-chip stock to buy and hold for 2025 is Microsoft. Microsoft is a leader in the public cloud; the company has also emerged as a leader in AI. Plus, Microsoft 365 continues to benefit from upselling, and the company maintains monopolylike positions in various areas, such as with its Office product, that serve as cash cows. Morningstar thinks Azure is the centerpiece at Microsoft: Even though it’s a $75-billion-dollar business, Azure grew at an impressive 30% rate in fiscal 2024. We model a five-year compound annual growth rate for revenue of 13% and think Microsoft stock is worth $490 per share.
Our next cheap blue-chip stock for 2025 is Pepsi. Pepsi’s well-known brands include not just its namesake, but also Gatorade, Lay’s, Cheetos, and Doritos, among other brands. After several years of anemic growth due to operational missteps and underinvestment, Pepsi’s management has righted the ship, from Morningstar’s perspective. And we think there’s room to grow as the company benefits from global secular tailwinds in its snack business, growth initiatives in attractive beverage subcategories such as energy drinks, and growth potential in various emerging markets. Over the next 10 years, we forecast the top line to grow at midsingle digits annually. We think Pepsi stock is worth $174.
Our final undervalued blue-chip stock to buy and hold is Danaher. Morningstar recently raised its economic moat rating on this medtech company to wide from narrow due largely to the company’s switching costs. Management’s strategic moves have pushed the company into attractive end markets with strong growth prospects and sticky, recurring revenue streams. As a result, the company has become a top player in the fragmented life sciences and diagnostic tool markets. We expect organic revenue to rise about 7% compounded annually through 2028. We think Danaher stock is worth $285.
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