7 Cheap Blue-Chip Stocks to Buy Before They Rebound
Cheap blue chip stocks refer to companies that are established and have a solid track record of strong earnings and returns for investors, but have recently fallen. These stocks also tend to be market leaders in the sectors in which they compete and have held dominant positions for many years or even decades.
For these reasons, stocks of profitable blue-chip companies are often the safest investments in times of crisis. market volatility and upheaval. Stock prices do not tend to fall as much as unprofitable and unproven stocks which are considered more speculative investments.
Blue chip stocks also tend to recover faster in periods when markets are rising. That said, there are plenty of cheap blue chip stocks that have fallen 20% or more amid this year’s market rout, providing attractive entry points for investors.
Here are seven cheap blue chip stocks to buy before they rebound.
|BAC||Bank of America||$37.69|
The consumer electronics giant has not been immune to the market downturn this year. So far in 2022, Apples (NASDAQ:AAPL) the stock fell 25%, making it one of the best cheap blue chip stocks to buy. Rather than worrying about the sell-off, investors should take advantage of the decline in the stock price to buy apple stock raise the fist.
Silicon Valley-based Apple remains one of the biggest and best tech companies in the world and it’s rare that investors have a chance at such a favorable entry point with the stock, which is currently trading at $136 per share.
AAPL stock recently took a hit after it was reported that China’s Covid-19 lockdowns were impact on the production of its new iPhone. However, this is a temporary issue. Innovation and market dominance should help Apple weather the current storm.
In the long term, the company and its shares should do well.
Snacks and beverage company PepsiCo’s (NASDAQ:DYNAMISM) the stock price is actually up this year, having gained 5% from a decline of 34% Nasdaq. PEP stock is currently trading at $180 per share, near its 52-week high.
The company productswhich include everything from Pepsi soft drink and Frito Lay chips to Quaker Oatmeal and sports drink Gatorade, are considered grocery essentials by consumers who love them.
In 2021, PepsiCo generated $79 billion in revenue from its food and beverage products. The company barely missed a beat during the Covid-19 pandemic as sales of its consumer products held up remarkably well.
PepsiCo also manages the current inflationary environment through its pricing power, or its ability to raise prices without losing customers.
Additionally, PepsiCo pays a dividend which is currently earning a solid 2.54% or $1.15 per share each quarter.
In March of this year, PepsiCo announced that it increase its dividend 7%, bringing the total increase over the last five years to 43%. The company is also buying back $1.5 billion worth of PEP shares this year, making it one of the cheap blue chip stocks to buy with a bright future.
In the long term, Home Depot will likely remain a great investment given its dominance in the home improvement and do-it-yourself home repair markets. Even with this year’s decline, Home Depot shares have still gained 78% over the past five years.
The second quarter results this year built on the strongest first quarter sales ever for Home Depot. Looking ahead, The Home Depot maintained its forecast for total and comparable sales growth of 3% for this year as a whole.
Visa (NYSE:V), one of the three largest credit card issuers in the world, is currently 11% lower than before the pandemic. This is one of the cheap blue chip stocks to watch.
Coming out of the pandemic, with travel and in-person dining resuming, many analysts expected the stock V bounce strongly.
The slow return of higher-margin international transactions on its credit cards weighed on the stock.
Visa is also grappling with loss of its activities in Russia after the invasion of Ukraine by that country. Yet despite its current issues, Visa remains a solid long-term investment.
Over the past five years, the stock has returned 75% to shareholders. Visa is currently selling at 25 times projected earnings this year, which is a low for the company.
Bank of America (BAC)
Bank of America (NYSE:BAC) the stock looks extremely cheap at its current price. Down 20% over the year amid a broad sell-off in all bank stocks, BAC shares are currently one of the cheapest blue-chip stocks to buy before bouncing back.
The decline in share price does not detract from the fact that Bank of America, the second largest lender in the United States, remains a very attractive long-term investment.
Bank of America is expected to perform well going forward as interest on its variable rate loans resets at higher levels following rate hikes by the US Federal Reserve.
Additionally, Bank of America improved its deposit base, which now stands at $1 trillion, and invested heavily in technology to improve its online presence and electronic transactions.
Additionally, Bank of America has a large wealth management arm and its trading unit keep making hay out of the current stock market volatility. Overall, BAC stock remains a safe bet for investors.
Berkshire Hathaway (BRK.B)
And, for now, it’s among the cheap, blue-chip stocks that have some breathing room.
Berkshire Hathaway has a massive stock portfolio valued at over $300 billion.
Buffett’s careful portfolio construction and buy-and-hold strategy have seen Berkshire Hathaway through many years market downturn, from the Black Monday crash of 1987 to the bursting of the dotcom bubble in 2000 and the financial crisis of 2008-09. Each time, BRK.B stock has come out stronger on the other side.
The company just reported a strong third quarter financial results which posted a 20% increase in operating profit. The company also repurchased $1 billion of its own shares between July and September.
While the market slowdown is primarily to blame, Ford has also been hit by ongoing difficulties with global supply chains that have made it difficult to source the parts needed for its vehicles, which has, in turn, slowed down its output.
Still, in the long run, there’s a lot to like about Ford and its stock. The company is pushing hard in electric vehicles and hasn’t been shy about wanting market leading challenge You’re here (NASDAQ:TSLA) for supremacy in space.
Electric versions of its iconic vehicles such as the Mustang sports car and F-150 pickup truck could help the Detroit automaker gain market share and possibly become a world leader in the growing electric vehicle industry.
As of the date of publication, Joel Baglole held long positions in AAPL, V and BAC. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.