Blue-chip stocks offer exposure to the world’s biggest and most well-financed corporations. They are industry titans with a history of surviving recessions and weathering economic storms.
But that doesn’t mean they’re immune to downturns. We’re witnessing one of the biggest thrashings on record, and it’s creating opportunities for those willing to look past the pain. Below I’ll reveal three of the best blue-chip stocks to buy before the recovery.
And make no mistake, a rebound is coming that will bring rich rewards to those willing to plant seeds now. Remember, the financial market’s advance is permanent, and the declines are temporary. We could argue that a recession has already been priced in at this point in the cycle. The average S&P 500 stock has already fallen 30%, and the average Nasdaq and Russell 2000 component has been cut in half.
While not every company will regain its old highs, these blue-chip beauties eventually will. And that makes them rousing buys at these deeply discounted prices.
Blue-Chip Stocks: Walmart (WMT)
Drawdown from the Highs: -26%
The last Walmart (NYSE:WMT) earnings report was disastrous, and Wall Street decided to bake in a slowdown in one fell swoop. The scalping shaved one-quarter of the company’s value, and after an oversold bounce, we’ve returned to the lows.
Given the treacherous market backdrop and the fact that the S&P 500 just tumbled 10% in a single week, it’s going to be challenging to build a bullish case on any of today’s picks based on the technicals.
So I won’t.
If you’re buying, it’s based on the company’s fundamental strength combined with the damage that’s already been baked in. WMT stock is down 26% from the highs, and its earnings estimates haven’t fallen near as much. Thus, its P/E ratio has shrunk, making it a cheaper bet. You’re also getting paid a 1.9% dividend while waiting for the inevitable recovery.
Walt Disney (DIS)
Drawdown from the Highs: -54%
For a blue-chip stock as old and storied as Walt Disney (NYSE:DIS), you might imagine a company that offers stability and lower beta. Unfortunately, DIS stock has been anything but. It’s gotten cut in half twice over the past three years. With the advent of Disney+, the Street started treating it as a high-growth stock. And while that seemed like a godsend following the pandemic when growth was in vogue, it’s causing severe trouble on the way down.
Indeed DIS stock is suffering alongside the fallout in other streaming-related companies like Netflix (NASDAQ:NFLX), Roku (NASDAQ:ROKU), and Warner Bros Discovery (NASDAQ:WBD). But now that prices are back to where they were in 2015, I think Disney has largely been de-risked. You rarely get a chance to acquire the Mouse House this far off the highs.
Blue-Chip Stocks: Apple (AAPL)
Drawdown from the Highs: -27%
As the heavyweight champion of all public companies, Apple (NASDAQ:AAPL) demands a spot among any list of blue-chip stocks to buy during bear markets. The creator of all i-Things has proven its staying power over the past few decades and continued to defy skeptics and naysayers. Even if Apple’s growth rate slows, its fortress of a balance sheet will give it a long runway to continue rewarding shareholders with increasing dividends and share buybacks.
If you want to fine-tune your entry, you can wait for the price trend to turn higher first. It is oversold at nearly 30% off the highs but could fall further before the rubber band finally snaps back. For now, it would need to climb back above $150 to reverse the daily trend. We’ll likely form a lower resistance zone that provides a quicker entry over the coming weeks.
On the date of publication, Tyler Craig 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.