- While the market rout has been painful, patient investors can turn that frown upside down with discounted blue-chip stocks to buy tied to relevant businesses.
- Amazon (AMZN): E-commerce has been taking a hit since the gradual return to normal began, but the segment won’t evaporate, making AMZN one of the blue-chip stocks to buy.
- Rockwell Automation (ROK): A disappointing earnings print has seen Rockwell Automation struggling, though industrial automation remains compelling.
- Boeing (BA): The poster child of poor corporate decisions, Boeing is still a powerhouse among blue-chip stocks to buy for patient investors.
- Southern Copper (SCCO): Though broader market fears has impeded SCCO’s trajectory, its core operations are vital for the industries of tomorrow.
- PayPal (PYPL): Now trading below its pre-pandemic low, PayPal seems like a bold discount for the potentially rising gig economy.
- Five Below (FIVE): Given concerns about an incoming recession, Five Below’s discount-retailer business makes it one of the most intriguing stocks to buy.
- Coty (COTY): Though one of the riskiest stocks to buy, Coty’s beauty products could perform well as society recovers from the pandemic.
Though the recent frequency of red ink in the equities market has been painful, it’s difficult to say that it was surprising given that the benchmark S&P 500 index started the year on a dour note. Unfortunately, the go-go period following the initial impact of the coronavirus pandemic has faded, and the bill must be paid. Nevertheless, patient investors can use this headwind to strategize which blue-chip stocks to buy at fire sale prices.
By seemingly most indications, the market is headed lower, at least in the near term. One of the biggest negative catalysts for the bearish cycle is the rising inflation rate. First, you have an increasingly untenable cost-of-living situation, which in turn spells lower revenue potential for myriad industries. Second, the Federal Reserve hasn’t been the most aggressive in addressing the matter, which isn’t great news for stocks.
Essentially, investors prefer some reliable framework to base their trades on. Without it, circumstances look volatile, which is catalyzing a risk-off sentiment throughout the capital markets. Still, such a dynamic could benefit prospective participants of blue-chip stocks to buy, which are right now offering trusted stability at a discount.
Usually a power hitter among blue-chip stocks to buy, e-commerce giant Amazon (NASDAQ:AMZN) is looking rather lifeless these days. I can’t blame management if the office environment is tense. Its earnings report for the first quarter fell well short of analysts’ expectations, highlighted by an unexpected Q1 loss. The shock sent AMZN tumbling, leaving observers to wonder if this was a fluke or a sign of things to come.
If I’m being perfectly honest, there’s a chance that Amazon could disappoint in Q2 as well. Clearly, the company cynically benefitted from the grand work-from-home experiment, which saw e-commerce as a share of total retail sales jump from 11.9% in Q1 2020 to 16.4% one quarter later. However, Q2 2020 was the peak, with the metric declining steadily since then.
Adding to the woes are the circumstances of the new normal, which has people ditching their computers for actual social experiences. Still, in the long run, e-commerce is the future, making AMZN one of the blue-chip stocks to buy on discount.
Rockwell Automation (ROK)
Under normal circumstances, I believe most analysts would encourage their readership to consider Rockwell Automation (NYSE:ROK) as a long-term idea among stocks to buy. A specialist in industrial automation, Rockwell serves myriad industries, ranging from aerospace, energy, automotive, semiconductors, even entertainment. Essentially, the company enables its enterprise-level clients to maximize their efficiency and capabilities.
Unfortunately, just like Amazon above, Rockwell didn’t do so well when it came to the earnings print. In its fiscal second quarter of 2022, the automation specialist generated approximately $1.8 billion in sales, which was up only less than 2% year-over-year. More significantly, the company reported adjusted earnings per share of $1.66, which represented a gap down of 31% from the year-ago quarter.
So far this year, ROK is down a worrying 43%. Though Rockwell is suffering from the poor economic backdrop of the new normal, industrial automation could grow to a $395 billion sector by 2029.
When it comes to corporate antics that drive regular folks crazy, Boeing (NYSE:BA) may be the poster child of bad actors. Most notably, the management team engaged in aggressive stock buybacks, which would be fine during bullish cycles. However, when the Covid-19 crisis struck, those same buybacks left Boeing in a much weaker position. It also forced the firm to seek a bigger bailout from American taxpayers.
Then you have the whole 737 Max 8 controversy. To recap, two Max 8 jetliners — Lion Air Flight 610 and Ethiopian Airlines Flight 302 — crashed due to issues within the newly implemented Maneuvering Characteristics Augmentation System (MCAS). These two incidents caused a black eye on Boeing, forcing the Max 8 to be grounded between March 2019 and December 2020.
Without taking anything away from the ugliness, Boeing nevertheless remains an American icon. With travel demand picking up along with the military conflict in Ukraine possibly bolstering Boeing’s defense business, BA is an interesting name among blue-chip stocks to buy.
Southern Copper (SCCO)
Though mining firms generally have a poor reputation due to volatility and unpredictability, Southern Copper (NYSE:SCCO) seemed like a reasonable bet among blue-chip stocks to buy. Obviously, its namesake commodity is in hot demand due to the booming real estate market along with sharp demand for new cars — helped cynically in part by the global supply chain disruption.
However, SCCO stock would care to disagree. On a year-to-date basis, it’s down 5% while in the trailing month since the close of the May 13 session, it’s dropped a staggering 20%. These are figures that don’t align with the relevance that Southern Copper’s underlying assets provide.
Although SCCO could still have more to fall given its negative momentum, bold contrarians may want to nibble at shares right now while keeping the bulk of their powder dry. Should more demand pivot toward electric vehicles given the circumstances of the new global order, copper’s combination of utility and price will be too enticing to ignore.
Ordinarily, when a publicly traded company is awash in red ink, there’s a reason for it, and usually it’s not a good one. However, some discounts are so steep that they’re incredibly compelling. In my opinion, that’s what we have with digital payments and business processing platform PayPal (NASDAQ:PYPL). With a market capitalization of over $91 billion at time of writing, PYPL certainly qualifies as a blue chip, yet its performance is anything but blue-chip like.
Basically, PYPL has hemorrhaged almost 57% of market value on a YTD basis, making it one of the ugliest names among the majors. Still, contrarian investors should keep PayPal on their radar for blue-chip stocks to buy on heavy discount. It comes down to its relevance for the burgeoning gig economy.
According to a 2019 study, the gig economy generated $204 billion in gross volume, projecting to increase by 17% by 2023. Other data suggests that the segment’s gross volume could expand to $455.2 billion in the targeted year.
Five Below (FIVE)
One of the blue-chip stocks to buy that caught me off guard, I fully expected Five Below (NASDAQ:FIVE) to perform much better than it has given its core business. A discount retailer, most of the products in its stores are priced between $1 and $5, while a small assortment of higher-quality goods are priced between $6 and $25.
Five Below gives a touch of fun and class to your typical dollar store, seemingly making it a no-brainer discount. But outside of a 5% jump for the May 13 session, FIVE is down big, 39% off from its opening price of 2022. While that might normally spell trouble, Five Below is incredibly intriguing because of brewing recessionary fears. Basically, the company may experience a ramp up in demand as household budgets tighten.
Given evidence that residents of major metropolitan areas could be paying up to 40% of their income (or more) on core living expenses, the transition to discount specialty stores could come sooner than you might think.
So far this year, Coty (NYSE:COTY) has been a disaster. Hemorrhaging over 38% YTD, COTY seemingly wants to reach new lows. As well, the circumstances of the new normal haven’t exactly helped.
Amid the Covid-19 pandemic, worker bees were barely dressed. That went for college students as well, with remote work and learning protocols becoming the norm. It was our pajama moment, to borrow a phrase from a Washington Post op-ed. Naturally, such circumstances don’t really cater to the beauty industry due to a lack of public exposure.
But with Covid-19 fears fading, a broader return to the office seems at least within the realm of possibility. If so, it wouldn’t surprise me if COTY rises due to increased demand. Still, this is one of the riskiest ideas for blue-chip stocks to buy on discount so conduct your due diligence.
On the date of publication, Josh Enomoto 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.