Cheap blue-chip stocks refer to companies that are established and have a strong record of delivering solid earnings and 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, stocks of profitable blue-chip companies are often the safest investments during times of market volatility and upheaval. The share prices don’t tend to fall as much as unprofitable and unproven stocks that are viewed as more speculative investments.
Blue-chip stocks also tend to recover faster in periods when the markets rise again. That said, there are plenty of cheap blue-chip stocks that are down 20% or more amid this year’s market rout, presenting 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 this year’s market downturn. So far in 2022, Apple’s (NASDAQ:AAPL) stock has fallen 25% making it one of the best cheap blue-chip stocks to buy. 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 and it is rare that investors get a chance at such a favorable entry point with the stock, which is currently trading at $136 a share.
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, this is a temporary problem. Innovation and market dominance should help Apple weather the current storm.
Long-term the company, and its stock, should be just fine.
Snack and beverage company PepsiCo’s (NASDAQ:PEP) share price is actually up this year, having gained 5% compared to a 34% decline in the Nasdaq. PEP stock is currently trading at $180 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 drink, are considered essential grocery items by the 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 is also managing the current inflationary environment thanks to its pricing power, or ability to raise prices without losing customers.
Plus, PepsiCo pays a dividend that currently yields a strong 2.54% or $1.15 a share each quarter.
In March of this year, PepsiCo announced that it is raising its dividend by 7%, 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)
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 78% over the past five years.
The second quarter results this year built on the strongest first-quarter sales on record for Home Depot. Looking ahead, Home Depot has stood by its forecast for total and comparable sales to grow by 3% for all of this year.
Visa (NYSE:V), one of the three largest credit card issuers in the world, currently sits 11% lower than where it was trading at before the pandemic. It is one of the cheap blue-chip stocks to keep your eyes on.
Coming out of the pandemic, with travel and in-person dining resuming, V stock was expected by many analysts to rebound strongly.
The slow return of higher-margin international transactions on its credit cards has been a drag on the stock.
Visa is also grappling with the loss of its Russian business following that country’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 75% to shareholders. Visa is currently selling for 25 times this year’s projected earnings, which is rock bottom for the company.
Bank of America (BAC)
Bank of America (NYSE:BAC) stock looks extremely cheap at its current price. Down 20% on the year amid a broad selloff in 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 improved 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 current stock market volatility. All and all, 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 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 has famously carried Berkshire Hathaway through many a market downturn, 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 July through September period.
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, 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.