The current bear market is fraught with risk and tension. However, the downturn also presents a huge buying opportunity for investors as many leading blue-chip stocks are being pulled lower with the broader market, setting them up as undervalued blue-chip stocks. The share prices of these well-run and established companies are down despite the fact that they continue to produce robust earnings, exceed Wall Street expectations, and remain leaders in their respective markets.
Investors willing to stomach some volatility in the short-term are likely to be rewarded over the long-term as these stocks eventually bottom, recover, and turn higher again. While many unprofitable companies may never recover from this year’s bear market, reliable blue-chip stocks are sure to rebound.
Here are three undervalued blue-chip stocks for investors to buy in July, all of which are members of the Dow Jones Industrial Average that is comprised of 30 leading American companies.
Undervalued Blue-Chip Stocks: Goldman Sachs (GS)
Investment bank Goldman Sachs (NYSE:GS) is a money making machine. Period. The New York-based firm finds ways to earn money in good markets and bad. And down nearly 25% year-to-date, GS stock looks extremely undervalued at just over $300 per share. The stock is currently 28% below its 52-week high of $426.16 a share. And analysts expect the company’s stock to rebound strongly over the coming year. The median price target on Goldman Sachs’s shares is currently $420, which would be 38% higher than its current level.
And there’s seemingly nothing holding back Goldman Sachs this year. Despite extremely tough market conditions, the investment bank reported first quarter earnings of $10.76 per share versus $8.89 that had been expected on Wall Street, according to Refinitiv data. The bank’s revenue came in at $12.93 billion compared to the $11.83 billion that had been expected. While Goldman Sachs’ investment banking fees fell in the January through March period, it offset that decline with higher revenues from fixed income trading, consumer banking and wealth management.
For an undervalued blue-chip technology company, look no further than Seattle-based Microsoft (NASDAQ:MSFT). The company co-founded by Bill Gates continues to produce excellent results. Yet, despite its success, MSFT stock has also been brought low this year as markets have churned. At $260 per share, Microsoft’s stock is down 17.1% on the year and around 25% below its 52-week high of $349.67. The median price target on the stock is $350, suggesting a 34% increase from here.
The company behind the Windows operating system and the Xbox video game console beat analyst expectations across the board in its most recent quarterly results, posting earnings per share of $2.22 versus the $2.19 that was anticipated. They also posted revenue of $49.36 billion compared to $49.05 billion that had been expected on Wall Street. Microsoft also said that revenue from its Azure cloud computing service jumped 46% in the quarter and provided bullish forward guidance. The company is also in the process of closing its $68.7 billion acquisition of video game maker Activision Blizzard (NASDAQ:ATVI), which will give the tech giant in-house video game development capabilities.
Shares of sneaker and sports apparel company Nike (NYSE:NKE) are a screaming buy right now at under $110 a share. The Beaverton, Oregon-based company’s share price is down 36% this year as the bears maul the market and as some of its factories in Vietnam and China continue to be shut down due to Covid-19 outbreaks.
Yet, the decline in NKE stock has come despite the company proving that it is managing to navigate high inflation, factory shutdowns, and supply chain constraints. In its previous earnings print, Nike reported that it earned 87 cents per share, which was well ahead of Wall Street forecasts of 71 cents. Revenues increased 5% to $10.87 billion as Nike’s North American sales offset an 8% slump in China. Nike said its direct-to-consumer sales are thriving and that sports equipment sales rose 36% from a year ago.
The median price target on NKE stock is currently $133.50 per share, which implies 28.7% upside from current levels.
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Source: Investor Place