Blue-chip stocks are the focus of investors seeking stability and reliability in a volatile market. Typically, these stocks are known for their solid financial position, long-term profitability and consistent dividend payments. These factors make them perennial favorites among conservative investors.
The stock market has been volatile lately as investors ponder the possibility of a hard landing. This has led to a decline in the share prices of several companies that have traded at high valuations in the past. So, this is a golden opportunity for investors to buy quality assets at discounted prices.
The resilience of blue-chip companies often makes them safe havens in turbulent times. And their ability to weather economic downturns can lead to significant gains when markets recover. Looking ahead to the second half of 2024, we discover these three blue-chip stocks. All appear undervalued but may be poised for a rebound, making them attractive buying opportunities during the crisis.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) is characterized not only by its strong market presence, but also by its strategic positioning in new technologies.
The company has demonstrated remarkable resilience and growth over the past fiscal year. MSFT stock staged an impressive rally, reaching a high of around $460 before market corrections related to broader economic concerns caused a price adjustment. The decline represents a potential entry point, especially given the company’s impressive fundamentals.
In the most recent fourth quarter of fiscal 2024, Microsoft reported revenue of $64.7 billion, up 15.2% year-on-year. This growth is underpinned by significant gains in its diversified portfolio, particularly in the Intelligent Cloud segment. The Azure platform, a cornerstone of Microsoft’s cloud strategy, saw 30% growth, underscoring its dominance and expansion in cloud computing.
And Microsoft’s commitment to innovation, especially in the area of artificial intelligence (AI), the company is uniquely positioned in the technology sector. The company is a leader in AI research and application, integrating AI into all of its product lines, from Azure and Office 365 to Bing and beyond. This strategic focus not only enhances its existing services, but also opens up new revenue streams and market opportunities.
Johnson & Johnson (JNJ)
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Johnson & Johnson (NYSE:JNJ) is a major player in the pharmaceutical and healthcare sector. Despite a general downward trend in its share price since the beginning of the year, the company’s results for the second quarter of fiscal 2024 have generated optimism among investors.
Johnson & Johnson reported revenue of $22.4 billion in its quarterly report, beating market estimates. This revenue was primarily generated by the Innovative Medicine segment, which accounts for the majority of the company’s revenue.
A key highlight of the earnings report is the performance of Tremfya, JNJ’s lead drug in oncology and immunology. With an impressive 30.7% year-on-year growth, Tremfya is quickly gaining market momentum. It can potentially offset Stelara’s expected declines due to patent expirations.
Despite the downward revision to 2024 EPS guidance, Johnson & Johnson’s forward non-GAAP P/E of 16x remains below its five-year average of 16.5x, indicating a possible undervaluation. And the discrepancy highlights a potential investment opportunity, especially when you consider JNJ’s sharp increase in dividend yield to 3.09%, which reinforces the company’s appeal to dividend-focused investors.
Visa (V)
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visa (NYSE:V) is a colossal force in the payments processing industry. Visa is best known for its vast electronic payments network, and Visa’s strategic business operations and financial results continue to attract investors.
In addition, Visa’s market position is virtually unrivaled, processing twice as many transactions as its biggest competitor, Mastercard. In addition, the company has a wide economic moat that reflects its pricing power and extensive network effects.
Visa’s financial health remains exceptionally robust, as underscored by its impressive balance sheet and cash flow metrics. The company’s net margins have consistently ranged between 53% and 57%. For fiscal 2023, Visa reported operating cash flows of $20.8 billion on GAAP net income of $17.3 billion, underscoring the company’s capital management expertise and ability to effectively generate shareholder value.
Visa’s future growth is expected to be supported by strategic initiatives aimed at penetrating the emerging e-commerce and digital payments sectors and further boosted by the global trend toward cashless transactions.
At the time of publication, Mohammed Saqib did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com policies. Publishing guidelines.
At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.
