7 Cheap Blue-Chip Stocks to Buy Before They Rebound

2022年12月8日18:30 [UTC]

Cheap blue-chip stocks refer to companies that are established and have a strong record of delivering solid earnings and high returns to investors but have fallen off recently. These stocks also tend to be market leaders in the sectors in which they compete and have held dominant positions for many years, if not decades.

For these reasons, the stocks of profitable, blue-chip companies are often the safest investments during times of market volatility and upheaval. Their share prices don’t tend to fall as much as the stocks of unprofitable and unproven companies that are viewed as more speculative investments.

Blue-chip stocks also tend to recover faster during periods when stock markets rebound. And there are plenty of cheap blue-chip stocks that are down 20% or more amid this year’s market rout, creating attractive entry points for investors.

Here are seven cheap blue-chip stocks to buy before they rebound.

AAPL	Apple	$142.35
PEP	PepsiCo	$183
HD	Home Depot	$323.50
V	Visa	$209
BAC	Bank of America	$32.25
BRK-B	Berkshire Hathaway	$306
F	Ford	$13.12

Cheap Blue-Chip Stocks to Buy: Apple (AAPL)

The consumer electronics giant has not been immune to this year’s market downturn. So far in 2022, Apple’s (NASDAQ:AAPL) stock has fallen 20%. Rather than fret about the selloff, investors should use the decline in the share price to buy Apple stock hand over fist.

Silicon Valley-based Apple remains one of the biggest and best technology companies in the world. Rarely do investors get such a favorable price at which to buy AAPL stock.

AAPL stock recently took a big hit after it was reported that Covid-19 lockdowns in China are impacting production of its newest iPhone. However, that will be a temporary problem for Apple, as innovation and market dominance should help the hardware giant weather the current storm.

In the long term, the company and its stock should be just fine.

PepsiCo (PEP)

Snack and beverage company PepsiCo’s (NASDAQ:PEP) share price is actually up this year, having gained 5% compared to the 30% decline of the Nasdaq. PEP stock is currently trading at $183 a share, near its 52-week high.

The company’s products, which include everything from the Pepsi soft drink and Frito Lay chips to Quaker Oatmeal and the Gatorade sports beverage, are considered essential grocery items by the consumers who love them.

In 2021, PepsiCo generated $79 billion of revenue from its food and beverage products. The company barely missed a beat during the Covid-19 pandemic as the sales of its consumer products held up remarkably well.

PepsiCo is also managing the current inflationary environment well thanks to its ability to raise its prices without losing customers.

Plus, PepsiCo pays a dividend that currently yields a strong 2.5$.

In March of this year, PepsiCo announced that it was raising its dividend by 7% to $1.15, bringing the total increase over the past five years to 43%. The company is also buying back $1.5 billion of PEP stock this year, making it one of the cheap blue-chip stocks to buy with a bright future.

Home Depot (HD)

Home Depot (NYSE:HD) stock is down 21% this year, making it a very cheap blue-chip stock to buy. Now is an opportune time to grab HD stock at a deeply discounted price.

Over the long term, Home Depot is likely to remain a great investment, given its dominance of the home renovation and do-it-yourself home repair markets. Even with this year’s decline, Home Depot’s stock has still gained 75% over the past five years.

The company’s recent third-quarter resultsbuilt on the strong results it delivered in the first half of the year. Looking ahead, Home Depot has stood by its forecast for its total and comparable sales to grow by 3% for all of 2022.

Cheap Blue-Chip Stocks to Buy: Visa (V)

Visa (NYSE:V), one of the three largest credit card networks in the world, currently sits 6% lower than where it started 2022. It is one of the cheap blue-chip stocks to keep your eyes on, especially among financial companies.

Coming out of the pandemic, with travel and in-person dining resuming, V stock was expected by many analysts to rebound strongly. The slow rebound of consumers’ higher-margin international spending has been a drag on the stock.

Visa is also grappling with the loss of its Russian business following Russia’s invasion of Ukraine. Yet, despite its current issues, Visa remains a solid long-term investment.

Over the past five years, the stock has returned 84% to shareholders. Visa is currently selling for 29 times this year’s projected earnings, which is a relatively attractive valuation.

Bank of America (BAC)

Bank of America’s (NYSE:BAC) stock looks extremely cheap at its current price. Down 29% on the year amid a broad selloff of all bank stocks, BAC shares are currently one of the cheapest blue-chip stocks to buy before they rebound.

The share price decline doesn’t take away from the fact that Bank of America, the second biggest lender in the U.S., remains a very appealing long-term investment.

Bank of America should perform well going forward as the interest on its variable rate loans resets at higher levels following rate hikes by the U.S. Federal Reserve.

Additionally, Bank of America has increased its deposit base, which now sits at $1 trillion, and has invested significantly in technology to improve its online presence and electronic transactions.

Plus, Bank of America has a big wealth management arm, and its trading unit continues to make hay out of the stock market’s volatility. All in all, BAC stock remains a safe bet for investors.

Berkshire Hathaway (BRK.B)

Considered by many to be the ultimate blue-chip stock, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has proven time and time again that its share price can outperform the market in any environment.

And, for now, it’s among the cheap blue-chip stocks that have room to run.

Berkshire Hathaway owns a massive portfolio of stocks valued at more than $300 billion.

Buffett’s careful portfolio construction and buy-and-hold strategy have famously carried Berkshire Hathaway through many market downturns, from the Black Monday crash of 1987 to the dot-com bubble bursting in 2000 and the 2008-09 financial crisis. Each time BRK.B stock has emerged stronger on the other side.

The company just reported strong third-quarter financial results that showed a 20% increase in its operating profit. The company also bought back $1 billion of its own stock in the third quarter.

Berkshire’s Class B stock (its more affordable shares) is up 2% on the year at $306 per share, once again outperforming the market in times of turmoil.

Cheap Blue-Chip Stocks to Buy: Ford (F)

Shares of legendary automaker Ford (NYSE:F) have been beaten up more than most cheap blue-chip stocks this year. The Detroit-based company has seen its share price knocked down 39% in 2022.

While the market downturn is mostly to blame, Ford has also been hurt 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 its production.

Yet, in the long term, there’s plenty to like about Ford and its stock. The company is pushing hard into electric vehicles and has made no bones about the fact that it wants to challenge market leader Tesla (NASDAQ:TSLA) for supremacy in the space.

Electric versions of its iconic vehicles such as the Mustang sports car and F-150 pick-up truck could help the Detroit automaker gain market share and eventually become a global leader in the fast-growing EV sector.

On the date of publication, Joel Baglole held long positions in AAPL, V and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.