Friday is set to make the case of a bottom finally being in place for the broader averages. This is setting up an attractive strategy for investors seeking the cheapest blue-chip stocks.
2022 hasn’t gone as expected for blue-chip investors who enjoyed record highs and above-average, double-digit gains in the S&P 500 and Nasdaq over the past couple of years. The former broad-based, large-cap index is down 19%, while its tech-heavy counterpart has shed 27% amid bear markets this year.
Favorably, once valid arguments of a dead cat bounce are now in position to be replaced by a more positive and historically robust technical event known as a market-based follow-through day or FTD. It’s a critical starting point for a new bull market. With that in mind, here are three of the cheapest blue-chip stocks that are worth considering today.
| Ticker | Company | Current Price |
| NFLX | Netflix | $190.30 |
| MU | Micron Technology | $58.06 |
| TSLA | Tesla | $733.17 |
Netflix (NFLX)
Source: Charts by TradingView
Netflix (NASDAQ:NFLX) is the first of our cheapest blue-chip stocks to buy. If misery loves company, shareholders of the streaming giant are virtually in a league of their own.
Today, NFLX sits at the absolute bottom in stock performance among S&P 500 constituents with a year-to-date loss of nearly 70%. Make no mistake though, Netflix remains a market champ, and is now among the cheapest blue-chip stocks out there.
To be fair, Netflix didn’t get into the doghouse without its share of challenges and warnings along the way. But with the broader averages just now starting to support buy decisions among the market’s overly anxious casualties, Netflix’s 16 times forward P/E and sales ratio of 2.56 offer a historically compelling entry point into shares.
What also makes this among the cheapest blue-chip stocks today is NFLX stock’s vastly oversold monthly chart and bottoming hammer pattern into key long-term Fibonacci and trend support. Coupled with a bullish stochastics crossover, investors should expect a happy ending with this purchase.
Micron Technology (MU)
Source: Charts by TradingView
Micron Technology (NASDAQ:MU) is shaping up to be a terrific buy right now.
This year’s more cautious investors might point at MU stock’s outsized 39% decline as a result of the memory chip sector’s inability to keep up with demand tied to ongoing supply chain challenges.
Others might warn the industry is also highly cyclical and memory chips should be priced like a cheaper commodity. And to be sure, there’s some truth in the fearful advertising.
But today those concerns make less sense. Powerful tailwinds from the electric vehicle market, data centers, cloud computing and artificial intelligence conspire to make this blue-chip stock a truly undervalued semiconductor. As such, large-cap tech investors would be hard-pressed to find better value than Micron’s combined forward P/E of less than 5x and price to earnings growth ratio of 0.59.
MU stock’s monthly price chart shows a test of a key oversold, long-term up-channel and Fibonacci support, further supporting the bullish case.
Tesla (TSLA)
Source: Charts by TradingView
Tesla (NASDAQ:TSLA) is perhaps the most controversial blue-chip stock on this list. And for once, that controversy has almost nothing to do with Tesla CEO Elon Musk.
Cheap? Tesla may not come to mind as being among the cheapest blue-chip stocks. After all, its forward-price multiple stands at just under 60 times earnings. And shares fetch nearly 13 times last year’s sales. Yikes, right? Not really.
Without controversy, when viewed in the context of its historical pricing and combined with TSLA’s superior profitability and growth prospects as the electric vehicle industry’s leader, the case for value is undeniable.
Right now, with a more meaningful market bottom appearing, TSLA’s influence, size and strong-looking weekly chart double-bottom variation make TSLA stock a terrific pick for investors to park capital in now.
I suggest investors take ownership of TSLA stock with an eye on new all-times highs using an actively managed and fully hedged collar strategy.
On the date of publication, Chris Tyler is long Micron Technologies (MU) (either directly or indirectly), but no other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
