August started with a whimper, as the recent stock rally receded. After hitting an end-of-July $457 high, the SPDR S&P 500 ETF (NYSEARCA:SPY) pared back its gains and fell about 2% with plenty of intraday volatility on the charts. Although we’re closer to the Fed’s soft landing promises than many expected just a year ago, plenty of economic turmoil lies beneath the surface. For many investors, today’s stock values are higher than they should be, considering inflation, more rate hikes in the future, and general uncertainty. Still, we’re finding opportunities, especially in some of the best blue-chip stocks to buy.
Much of the stock market resurgence came from a handful of tech stocks riding the AI wave. Plus, August’s choppiness might be a sign investors are taking profits while they can. At the same time, though, a handful of key blue chip stocks are massively undervalued. These blue chip stocks have solid fundamentals and steady growth projections but remain widely ignored in the face of renewed tech exuberance.
While they may not mark a true all-time low today, these blue chip stocks are down on their luck.
Best Blue-Chip Stocks to Buy: AT&T (T)
Like many telecom stocks, AT&T (NYSE:T) declined rapidly over the past few months on allegations of lead contamination. The allegations, first published in July, pushed AT&T’s share price down more than 10% before it settled around $14 per share this month.
However, the problem may not be as prevalent as initially reported. Better, investors bullish on the telecom could see substantial upside from AT&T as the company works through the legal process and deploys planned growth strategies. In fact, on July 25, AT&T published a press release detailing its plan to address lead-clad cabling concerns. They’re currently working with the U.S. Environmental Protection Agency (EPA) to test and assess the extent of the potential liability. Still, analysts assess see limited long-term fallout and that “the market is overly pessimistic on AT&T’s future.”
AT&T’s wireless revenues are continually increasing. Profitability is up, and free cash flow is increasing. AT&T might be one of the best blue-chip stocks to buy, especially with its 7% dividend yield.
General Motors (GM)
General Motors (NYSE:GM) will likely be one of the first legacy manufacturers to pivot into electric vehicles successfully. Plus, GM’s recent partnership with Tesla (NASDAQ:TSLA) only reinforces its dominant position.
Furthermore, the company announced that all five of its electric vehicles will have highly-anticipated vehicle-to-home charging capabilities in the next few years. That means the vehicles will act as supplemental power sources for the home. This capability is critical in emergencies like hurricanes that cut power across states.
GM is priced around where it was pre-pandemic, indicating investors see much less downside than they did when the stock skyrocketed to almost $60 in 2021. Still, with GM’s current industry dominance and forward-thinking management, GM is one of the best blue-chip stocks to buy.
Best Blue-Chip Stocks to Buy: Disney (DIS)
Disney (NYSE:DIS) has long been a blue chip stock favorite, but it’s seen better days. The stock hit a 5-year low this week, and investors seem to be running for the door. But, practically speaking, little’s changed in Disney’s overall outlook to create such bearish sentiment. And the company isn’t resting on its laurels, either. Instead, it’s adapting to changing media trends and is keeping pace with even the biggest “new media” giants.
Disney embraced streaming wholly in recent years. The company leveraged its vast media empire, including Disney+, Hulu, and ESPN+, to capture a growing share of cable cutters. Disney also remains adept at managing their vast intellectual property catalog, licensing franchises to generate massive profits. Star Wars and Marvel alone are worth a combined $95 billion, and watchers of both aren’t demonstrating franchise fatigue yet.
Ultimately, Disney won’t lose their crown anytime soon, and investors looking for blue chip value should be bullish on Mickey.
Pfizer (PFE)
Pfizer (NYSE:PFE) is priced well below its pandemic highs. However, it still remains a quality blue chip stock for long-term portfolios. Expectedly, COVID-related sales fell substantially this year, although upcoming cold weather might boost revenues. Still, Pfizer’s core holdings remain robust. Beyond COVID-19 products, net sales jumped 5% this quarter.
Pfizer remains focused on the future, with a robust pipeline ensuring a steady stream of revenue. Its production and distribution networks also ensure the company can compete against generics, threatening its bottom line. Analysts are just as bullish on Pfizer, with estimates indicating PFE is nearly 35% undervalued today. The company’s growing revenue, profits, and 4% dividend yield also make Pfizer perfect for undervalued blue chip seekers.
Best Blue-Chip Stocks to Buy: Lockheed Martin (LMT)
Unfortunately, geopolitical conflict is here to stay. That makes Lockheed Martin (NYSE:LMT) a dominant stock in the defense industry. Most recently, Lockheed beat earnings expectations. Better, its flagship F-35 program promises to remain a cash cow by producing new equipment and maintaining existing global fleets.
Likewise, the US government remains on high alert with the Russia-Ukraine conflict. In addition, US defense spending grew to $1.77 trillion in 2023, with $270 billion allocated toward contracts. Lockheed accounts for 28% of US defense contract spending, so it’s reasonable to infer that growing defense budgets bode well for this defense industry blue chip stock.
JP Morgan Chase (JPM)
Investment giant JP Morgan Chase (NYSE:JPM) just reported a profit of $14.5 billion, even amid economic constraints and interest rate hikes raising its cost of business.
JP Morgan is the most dominant bank in the industry, making its recent fall from grace even more surprising. But that dominance is unquestioned, and JP Morgan’s competitive advantage remains intact. JP Morgan is one of, if not the largest consumer and commercial banking company in America, extending its reach into Latin America. Geographic diversification is key for continued growth. JP Morgan demonstrates they have what it takes to keep their global advantage.
Finally, JP Morgan emerged largely unscathed from the early year’s banking crises. This resilience means they’re well-positioned to withstand further economic chaos. This stability should make blue-chip investors confident in the company.
Chevron Corporation (CVX)
Chevron (NYSE:CVX) suffered through energy market turbulence. Still, global oil prices are rapidly stabilizing, and Chevron is poised for a breakout.
The company’s July earnings report saw an earnings drop on global oil market instability. However, Chevron remains ready with a hefty cash reserve. The oil giant is also happy to appease investors, buying back $4.4 billion worth of stock last quarter and projecting another $3 billion repurchase this quarter. Analyst consensus indicates Chevron is a Strong Buy, with 14 recommending immediate purchase, 2 projecting outperformance, and the remaining 12 maintaining that the stock is worth holding.
Chevron also remains committed to a sustainable future. The company invests heavily in low-carbon ventures to meet a (possibly) inevitable pivot away from oil and gas. The company’s pledged a $10 billion investment in the sector by 2028, and Chevron’s existing ecosystem makes it prime to capture a growing green market.
On the date of publication, Jeremy Flint held a long position in GM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.