Blue-chip stocks are typically known as high-quality, reliable and well-established companies with strong track records of growth and profitability. However, even these market leaders can sometimes face challenges and setbacks that cause their share prices to drop below their intrinsic values.
Yet market fluctuations and such price declines create an opportunity for savvy investors to buy these blue-chip stocks at bargain prices and enjoy long-term returns. With that information, here are three stalwarts of the stock market renowned for their stability, dividends and long-standing track records.
Ford Motor (F)
Despite challenges in the evolving EV landscape, Ford Motor (NYSE:F) has a robust brand, loyal customer base, and ambitious electrification initiatives. Yet, the automotive landscape is evolving rapidly, with changing consumer preferences around EVs and the technological developments for autonomous driving. As a result, like many of its peers, Ford faces the challenge of adapting to this dynamic environment.
In the fourth quarter, management announced $46 billion in revenues, marking a 4% year-over-year (YOY) increase, driven by consistent vehicle volumes. However, a $1.7 billion pre-tax, non-cash pension plan revaluation resulted in a $526 million net loss. Non-GAAP earnings were 29 cents per share, down from 51 cents in the prior year’s quarter. Adjusted free cash flow exceeded expectations at $6.8 billion.
Ford’s forward-looking strategies involve cost-cutting measures and quality enhancements to increase market share and propel future growth. Despite a small year-to-date (YTD) decline of nearly 1%, F stock is trading at an enticing 0.3 times sales (P/S) and 6.5 times forward earnings. Analysts’ average price target for F shares stands at $13, indicating a potential 9% upside from current levels. Additionally, Ford Motor currently boasts a compelling dividend yield of about 5%.
Citigroup (C)
Among our blue-chip stocks, Citigroup (NYSE:C), the parent company of Citibank, boasts a significant advantage through its extensive presence worldwide, serving over 100 million customers. However, investors have been concerned about global macroeconomic risks as well as a potentially slowing U.S. economy.
In fact, the banking giant’s recent financial performance has painted a somewhat bleak picture. In the fourth quarter of 2023, Citigroup reported a net loss of $1.8 billion or -$1.16 per diluted share. A year ago, net income was $2.5 billion, or $1.16 per diluted share.
To drive future success, CEO Jane Fraser initiated a comprehensive restructuring program, primarily focusing on expense management and digital transformation. The projected 2024 revenue of $80 to $81 billion reflects confidence in this strategy. The bank aims to wind down inefficient and less profitable divisions, freeing up capital for strategic investments. Fraser’s focus lies in strengthening areas like international wealth management and investment banking.
Citigroup shares have returned around 8% so far this year and are trading at a valuation of 9.4 times forward earnings. Its price-to-book (“PB”) ratio stands at 0.56. The 12-month median price forecast for C stock is $60.50, suggesting a potential upside of about 9%. The banking giant offers a dividend yield of 3.8%.
Schlumberger (SLB)
Leading global oilfield services company Schlumberger (NYSE:SLB) works with upstream energy players in locating oil and gas reserves, drilling wells and evaluating hydrocarbon deposits. As a result, it delivers consistent revenue streams and dividends despite fluctuating energy markets.
In January, management announced robust top and bottom results for the fourth quarter and full year 2023. Quarterly revenues came in at $8.99 billion, up 8% sequentially and 14% YOY. Similarly, full-year revenue of $33.14 billion increased 18% YOY. As a result, the energy services giant increased quarterly dividends by 10% bringing the current dividend yield to 2.25%.
Yet, SLB stock is down about 7% YTD, while the shares change hands at 13.6 times forward earnings and 2.1 times trailing sales. The 12-month average price forecast for SLB stock is $67.7, suggesting a 39% upside potential from current levels.
On the date of publication, Tezcan Gecgil 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 writer, subject to the InvestorPlace.com Publishing Guidelines.
