3 Blue-Chip Stocks to Buy at a 52-Week Low in February
It’s tough to make the argument that stocks are cheap. But it’s still possible to find some value. You can even find some blue-chip stocks at a low price.
Blue-chip stocks are known for consistency above all else. They’re frequently thought of as “sleep well at night” stocks because they provide predictable revenue and earnings. They also frequently pay among the best dividends in terms of yield.
But even blue-chip stocks can underperform. And when that underperformance coincides with monetary policy that includes higher-for-longer interest rates, they can start trading at a discount to their historical averages and to their sectors. Here are three examples of blue-chip stocks at a low price that are available to value-oriented investors.
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Bristol-Myers Squibb (BMY)
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Bristol-Myers Squibb (NYSE:BMY) continues to trade near its 52-week low despite beating analysts’ estimates on the top and bottom line in the company’s most recent earnings report in February. The company reported better-than-expected results from its two flagship drugs, Eliquis (marketed with Pfizer) and Optivo.
In the case of a biopharmaceutical company, your stars have to be your stars. That was the case as Eliquis and Optivo posted approximately 7% and 8% year-over-year revenue gains respectively while the company as a whole only posted a year-over-year gain of approximately 1%.
This is where analysts have problems. Some believe that Bristol-Myers won’t be able to get new drugs launched before Eliquis begins facing biosimilar competition.
That’s a fair concern. But at 12x current earnings and 6x forward earnings, BMY stock is trading at a discount to its historical average and the sector as a whole. Add in a growing dividend with a yield of around 5% and you have the formula for a stock that is undervalued and ready to move higher.
Pfizer (PFE)
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The fall of Pfizer’s (NYSE:PFE) stock is not without merit. The company was one of the biggest winners after its COVID-19 vaccine that it developed with BioNTech (NASDAQ:BNTX) sent revenue and earnings soaring. It’s been the normalizing of that demand that has caused analysts to reject the stock.
But as other InvestorPlace contributors and I have said for months, PFE stock looks extremely undervalued. The company has approximately a dozen drugs and therapeutics that should be approved in the next 18 months. And the company’s existing Prevnar 13 and Prevnar 20 drugs are showing strong year-over-year growth.
Plus, with PFE stock trading at just 12x forward earnings and offering a dividend that yields 6.1%, analysts are starting to bid the stock higher. The median estimate of $13.21 is 13.4% higher than the current Pfizer stock price.
Alcoa (AA)
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Alcoa (NYSE:AA) looks to have formed a bottom in late 2023. Since then, you can’t necessarily say what’s happening with the stock is a recovery, but it is starting to form a pattern of higher lows that makes it a solid choice among blue-chip stocks at a low price.
The fundamental case for AA stock is that aluminum prices are expected to rise in 2024. That growth will only be in the low single digits. However, earnings are a more bullish story. Alcoa is projecting a 353% increase in earnings in the next 12 months.
Still, the stock won’t be anywhere near the all-time high it reached in 2022. Considering that Alcoa stock is down 48% in the last 12 months, investors will take whatever they can get.
The rally in aluminum could be stalled if demand in China doesn’t increase. But for now, analysts seem to be encouraged by AA stock. They’re starting to raise their price targets even if the stock isn’t a full-throated buy.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.
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