These 3 Blue Chip Names Are Trading at Attractive Valuations
It’s not often that blue-chip stocks go on sale, but that’s exactly what has happened to a few of these iconic names in 2022 thanks to all of the market volatility. For the investors that are paying attention, these stocks could end up being great deals at their current valuations, and it’s hard to argue against long-term purchases of high-quality companies after they have pulled back.
Blue-chips are particularly attractive at the moment given all of the different question marks investors have to ponder about the economy going forward. Since they are established businesses with outstanding reputations and market-leading positions in their respective industries, one could argue that these stocks are safe bets to turn a profit in both good and bad times.
If you are interested in some of the best blue chip bargain stocks to buy now, here are 3 to consider:
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While this semiconductor giant has been dealing with manufacturing delays and increasing competition, the stock has been so beaten up over the last year that the chances are good the bad news for Intel Corporation is already priced in. That means investors might want to consider adding shares to their long-term accounts, especially with the stock trading at a 10.06 P/E ratio. Make no mistake, even though the share price has been taking a hit recently this is still a dominant force in the chip-making industry and a company that offers exposure to some of the most exciting areas of the tech sector, including data centers, artificial intelligence, personal computing, automotive, and the Internet of Things.
The company is also worth a look thanks to its cost advantages that are realized from large-scale semiconductor fabrication facilities. The only big competitor for semi manufacturing is TSMC, which means Intel is poised to benefit from strong demand over the next decade after it can put the manufacturing delays behind. Additionally, the stock offers a 2.99% dividend yield, which is another great reason to consider adding shares given the persistent signs of rising inflation.
One of the more perplexing developments in the market over the last few weeks has been the weakness in the financial sector. Bank stocks like Bank of America have faced selling pressure even though the Federal Reserve will be raising interest rates this year, which might be signaling some uncertainty about the economy or a change in sentiment due to geopolitical factors. As a reminder, banks tend to perform well in a rising rate environment, which means that this could end up being a great stock to add ahead of the big moves from the Fed.
Bank of America is one of the largest financial companies in the world, and a true force in the U.S. retail banking industry. It’s worth noting that the company is more sensitive to interest rates than other banks, which means it could deliver strong earnings growth in the coming quarters. The company also posted a strong Q4 earnings report, with net revenues up 10% year-over-year, which is another reason why investors should be confident in this blue-chip bank stock. Bank of America offers a 1.95% dividend yield and trades at an attractive P/E of 12.10, and if the stock can reclaim the 200-day moving average in the coming sessions it would potentially provide a logical entry point.
Finally, we have perhaps one of the most underrated blue-chip names out there, Merck & Co. It’s a worldwide pharmaceutical company that provides a range of prescription drugs and vaccines in numerous therapeutic areas including cancer, cardiometabolic disease, and infections. Merck is worth a look at its current valuation for several reasons. First, the company’s drugs like Keytruda, Januvia, and Gardasil provide billions in net sales each quarter, which in turn helps the company deliver consistent earnings and return capital to shareholders. Merck stock currently offers a very appealing 3.6% dividend yield, and investors can feel confident that the payout is going to be safe over the long term.
Another positive factor to consider is Merck’s move to spinoff its slower-growth businesses into the new company Organon, which should help the company focus on more exciting opportunities over the long term. It’s also worth noting that the company expects $5-$6 billion in net revenues from the company’s COVID drug Molnupiravir, which is another plus to consider at this time. It’s hard to find many negatives about Merck’s business model, which means adding shares for the long term could be a very rewarding decision.