In my view, a sure-shot way of minting money from the markets is buying and holding with patience. Of course, the idea needs to be well-researched as a first step. An important point to note is that stocks can witness price or time correction. This column focuses on stagnating blue-chip stocks (time correction) that can awaken and surge higher.

It’s not uncommon for investors to lose interest in stocks that have remained sideways for an extended period. That translates into undervaluation, and the stagnating blue-chip stocks discussed trade at a valuation gap.

I, however, believe there are positive business and growth catalysts for these stories on the horizon. As a result, the price action in these stocks will likely be significant in the next 24 months. During this period, I think these stagnating blue-chip stocks will outperform index returns.

Let’s look at the factors that can trigger a rally in these undervalued names.

Lockheed Martin (LMT)

Lockheed Martin (NYSE:LMT) stock has declined 7% in the last 12 months. Further, in the last five years, LMT stock has returned 48%. In my view, the blue-chip stock looks undervalued at a forward price-earnings ratio of 16.8. A dividend yield of 2.88% adds to the attractiveness.

The first reason to be bullish now is rising defense spending. For 2023, global defense expenditures surged to record highs of $2.2 trillion. As NATO countries boost defense spending, Lockheed will likely be a key beneficiary.

Specific to the company, the order backlog growth has been encouraging. LMT ended 2023 with a record backlog of $160.6 billion. It is well-positioned to accelerate revenue growth in the next few years and could take the stock higher.

At the same time, the company has guided for free cash flow of $6.2 billion for the year. FCF is likely to be similar or higher in the next few years. That will ensure value creation through dividends and share repurchases.

AstraZeneca (AZN)

AstraZeneca (NASDAQ:AZN) is another blue-chip stock that has been stagnating but holds promise. AZN stock looks attractive, valued at a forward price-earnings ratio of 15.7, and offers a dividend yield of 2.2%.

It’s worth noting that biopharmaceutical stocks have been ignored in the post-pandemic world. However, AstraZeneca’s drugs have been addressing multiple global health concerns. The therapy areas include oncology, rare diseases, cardiovascular, renal, respiratory and others. With a big addressable market, there is clear growth visibility.

Currently, AstraZeneca has 178 projects in the pipeline. Of these, 17 molecular entities are in the late-pipeline stage. Further, the company believes at least 10 phase III trials have blockbuster drug potential. If that holds true, the outlook for revenue growth is robust in the next few years.

I must add that AstraZeneca is well-diversified globally. In 2023, the biopharmaceutical company reported 35% year-on-year growth in emerging markets (ex-China). A diversified presence across therapy areas with a wide geographic reach makes the story attractive.

Occidental Petroleum (OXY)

Occidental Petroleum (NYSE:OXY) stock has trended higher by 9% in the last 12 months. The gain in the stock can largely be attributed to the recent upside. I believe OXY stock is undervalued and poised for bigger gains in the next 24 months. Besides the valuation, the stock offers a dividend yield of 1.37%, and I expect steady dividend growth in the next few years.

An important point to note is that oil recently hit an 11-month high, with OPEC likely to continue production cuts. Further, factors like geopolitical tensions and possible expansionary policies will likely support an upside in oil. Occidental will be positioned to benefit in the form of higher realized prices and swelling free cash flows.

It’s worth adding here that Occidental has an investment-grade balance sheet. Last year, the company reported FCF of $5.5 billion. For the current year, FCF is likely to be higher. Therefore, there is ample flexibility for dividend growth, share repurchase, and exploration investments. The Warren Buffett pick will likely be a value creator in the coming years.

On the date of publication, Faisal Humayun 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.