When applied to stocks, the term “blue chip” generally refers to a well-established company with a strong market position and a track record of outperformance. Selling power (NYSE: CRM) and Intuitive (NASDAQ: INTU) are perfect examples. Both are industry leaders, and while the S&P500 has risen 82% over the past five years, shares of Intuit and Salesforce have jumped 253% and 284%, respectively, over the same period.

Even so, none of the stocks were spared during the ongoing sell-off. As Wall Street worries about the economic ramifications of high inflation and geopolitical strife, the S&P 500 has fallen 10% from its peak, meaning it is in correction territory. But Salesforce and Intuit both plunged more than 30%. Fortunately, that means long-term investors can buy a few shares of these blue chip stocks at a discount.

Here’s what you need to know.

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1. Sales force

Salesforce pioneered the modern customer relationship management (CRM) industry. It was one of the first companies to offer software as a cloud service, and its sense of innovation has kept it at the forefront of technology. Its CRM platform includes a suite of software for sales, customer service, marketing and commerce, all designed to facilitate productivity and collaboration. More generally, these tools help organizations grow by building and maintaining good relationships with customers.

To bolster its core products, Salesforce also offers a low-code platform for drag-and-drop app development, an integration platform that syncs data between different systems, and analytics tools that help customers to make sense of information. The company is also supercharging its products with artificial intelligence, enabling companies to automate service workflows, personalize marketing and sales content, and make informed sales decisions.

Thanks to the breadth of its platform, Salesforce has dominated the CRM industry for eight consecutive years. In fact, it captured a 23.9% market share in the first half of 2021, compared to 19.5% in 2020. This means that Salesforce holds more market share than its next four competitors combined – and that dominance translated into strong financial results. In the past year, revenue grew 25% to $26 billion, fueled by double-digit growth across all product segments and geographies, and free cash flow climbed 29% to $5.3 billion.

Looking ahead, Salesforce pegs its addressable market at $248 billion by 2025, which leaves plenty of room for growth. And the management team led by the founder is working to capitalize on this opportunity. Last year, Salesforce rolled out new features to its CRM suite of apps and acquired the Slack communications platform, a tool that now allows Salesforce customers to collaborate in real time even when working remotely.

In short, Salesforce has a sustainable competitive advantage in an important market, and with stocks trading at 7.5 times sales – well below the five-year average of 8.9 times sales – now seems like the right time. to add this blue chip stock to your portfolio.

2. Intuition

Intuit specializes in financial software and services, and its portfolio includes well-known brands such as TurboTax and QuickBooks. Millions of consumers use the former to file their taxes each year, while the latter is a suite of accounting and commerce tools for small and medium-sized enterprises (SMEs) and self-employed (SE) entrepreneurs. Intuit is the undisputed industry leader in both respects, holding 73% and 80% of the U.S. tax preparation and accounting software market share, respectively.

Management is strengthening its position in the market by working to transform Inuit into an AI-driven platform of experts. For example, TurboTax and QuickBooks now have “live” options, allowing users to connect with tax and accounting professionals. And in 2020, Intuit acquired Credit Karma, an AI-based financial tool that connects consumers to credit cards, insurance policies, deposit accounts, and various loan products (e.g. personal loans, car loans).

Collectively, Intuit’s leadership position in tax preparation and accounting has led to consistently strong financial results. In the past year, revenue increased 48% to $11.4 billion and free cash flow increased 24% to $3 billion. More importantly, Intuit has plenty of room for growth in the years to come.

The company estimates its primary market opportunity at $64 billion, a figure that includes TurboTax and QuickBooks. But that figure jumps to $230 billion when you add in Credit Karma and value-added products for QuickBooks, like payment processing and payroll software for SMBs. On that note, Intuit recently acquired Mailchimp, a company that helps SMBs build digital storefronts, run targeted ad campaigns, and manage customer relationships. In a few years, this move might seem brilliant, as it creates obvious synergies with Intuit’s QuickBooks ecosystem.

In short, Intuit is already the benchmark for tax preparation and accounting software, but its ambitious growth strategy could help it expand into the broader commerce and financial services markets. That’s why this stock looks like a smart buy.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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