Blue-chip stocks belong to companies with sound business models and track records of strong growth. In addition, they tend to be stable large-cap businesses, which have stood the test of time and produced attractive returns over a long period. So naturally, these stocks represent the cream of the crop and therefore trade at significant premiums. However, due to various internal and external factors, you might find a few that are trading cheaply.
The pandemic situation last year led to one of the most chaotic trading environments in recent memory. Stocks across the board felt the wrath of the unprecedented event. The S&P 500 took a massive hit during the height of the pandemic, but since then has recovered incredibly well. The index is up a whopping 40% in the past 12-months. Despite the turnaround, though, the market remains volatile, fueled by events such as the Reddit-induced short squeeze earlier this year.
Hence, I’ve compiled a list of blue-chip stocks that are trading under $20 at this time.
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Infosys (NYSE:INFY)
Bayer (OTCMKTS:BAYRY)
General Electric (NYSE:GE)
China Life Insurance (NYSE:LFC)
Barclays (NYSE:BCS)
Glencore (OTCMKTS:GLNCY)
ICICI Bank (NYSE:IBN)
Blue-chip stocks To Buy: Infosys (INFY)
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Infosys is an Indian information technology (IT) company that provides various digital services to its customers. Some of these services include application development, infrastructure management, support services, product engineering and others. Its unique products and platforms have enabled it to command high margins and separate itself from its peers. Hence, INFY stock represents the crème de la crème of the IT services industry.
The company has done relatively well on the earnings front in weathering the pandemic storm and expanding its top line again. In its fourth quarter of fiscal 2021, revenues of $3.61 billion were 12.8% higher on a year-over-year basis. Moreover, its operating margin was at a healthy 24.5%, with a free cash flow conversion of 114.6% of net profit. Its critical transformation strategy has now started paying dividends, and with the sector regaining momentum, INFY stock could breakthrough this year.
Bayer (BAYRY)
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Bayer is one of the oldest life sciences companies in the world, with a wide portfolio of products across various healthcare segments. Unfortunately, it has been caught in litigation turmoil ever since its Monsanto acquisition in 2018. Therefore BAYRY stock is one of the most undervalued large-cap pharmaceutical stocks in the market at this time.
Its litigation troubles have weighed down the performance of the business in the past year or so. However, striking a $2 billion deal to resolve future claims can now focus on its path to growth again. When adjusted for exchange rates, the company reported a 0.6% increase in revenues to €41.4 billion in 2020. The number is impressive, considering its internal troubles and pandemic-related weaknesses.
It expects solid growth across all its core segments this year, focusing on driving profitability and free cash flows in the next few years. Hence, BAYRY stock has the platform to push on from here and return to winning ways.
General Electric (GE)
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U.S. industrial titan General Electric has fallen out of line in the past few years. Revenue has shrunk, and its massive debt load has weighed heavily on its bottom-line. However, GE stock is on track to redeem itself by streamlining its operations to become an enterprise with a tighter focus.
GE’s top and bottom-line are certain to go through fits and starts in an uncertain economy. However, the management has done well to hive off assets to reduce its debt load in the past couple of years. The reduction amounts to over $40 billion since 2018. Moreover, its merger with Aircraft leasing company AerCap Holdings will get it $23.9 billion in cash and another billion in the form of a note. As global travel demand picks up, demand for aircraft leases will rise, which should inure the benefit of AerCap.
China Life Insurance (LFC)
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China Life Insurance offers insurance services in the People’s Republic of China. It has four main segments: life insurance, accident insurance, health insurance and other businesses. The company announced it was restructuring back in 2018, and the results of its initiatives are starting to bear fruit. However, LFC stock has been ignored by investors and therefore has massive upside potential.
Earning results for the company have been stellar, as its revenues grew by double digits in each of the four quarters last year. It generated revenues of RMB804.6 billion for the full year, which represents a 10.3% year-over-year improvement. The insurance sector will only get lucrative for LFC, with China’s aging population and low insurance penetration rates. Future revenue growth EBIT growth is expected to be 12.2% and 14%, respectively.
Hence, there’s a lot to look forward to with LFC stock this year and beyond.
Barclays (BCS)
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Barclays is one of the largest clearing banks in the U.K., having assets worth upwards of $1.9 trillion. The bank has struggled with top-line growth in the past few years, which is why BCS stock has been on a rocky path. However, we see a resurgence in the bank’s performance, with impressive profit growth in profits and multiple growth catalysts.
Despite the disruption posed by the pandemic, the bank has done well to deliver earnings growth of 1% in fiscal 2020 over 2019. Diversification of revenues across different customer segments has been remarkable, which has been a constant criticism. Moreover, in its most recent quarter, investment banking numbers delivered a 17.9% return on tangible equity (RoTE). Recovery in the consumer segments will likely ensue in the next couple of years, further boosting its RoTE. Additionally, it targets £900 billion in revenues from its payments verticals business by 2023. Hence, with a massive growth runway, BCS stock is in a great position to break past the $20 barrier.
Glencore (GLNCY)
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Glencore is a Swiss-based commodity conglomerate that produces, processes, refines and markets minerals and metals. It isn’t just a mining company, as its marketing division sources commodities from third parties and resells them. Despite 2020 being a tough year for the sector, the company has done exceedingly well in controlling its costs. With the higher prices of copper and zinc, it is expected to ramp up production and maximize its margins.
Under the circ*mstances, 2020 turned out to be a relatively good year for the company. It generated roughly $142 billion in revenues compared to the $215 billion it made in 2019. Additionally, its pre-tax loss of $5.1 billion was almost entirely caused by the $6 billion in impairment charges.
2021 looks highly promising for the company, boosted by the strong momentum in commodity prices. Moreover, it’s planning to continue on its growth path to expand the production of most of its metals. Hence, GLNCY stock is on the right track to mount a comeback this year.
ICICI Bank (IBN)
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ICICI Bank is one of the most prominent banks in India, with assets worth $190 billion in 2020. It has also been one of the best performing banks in the country, five-year average revenue growth of 11.7%. With several exciting developments for the banking sector in India’s recent budget, IBN stock is poised to have a fantastic 2021.
ICICI has done incredibly well in leveraging its digital edge and capturing market share in a challenging loan growth environment. It capped off the year in style, posting revenues of INR 44 billion versus INR 12 billion in the same period last year. Additionally, net interest income was also up 17% on a year-over-year basis to INR 104.3 billion. Looking ahead, the company’s digital thrust and the positive developments in the Indian budget are two key elements that will underpin the company’s long-term success ahead.
On the date of publication, Muslim Farooque 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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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I'm an investment enthusiast with a deep understanding of the financial markets, particularly in the realm of blue-chip stocks and their performance. My expertise is demonstrated by years of active engagement in the financial sector, analyzing market trends, and making informed investment decisions.
Now, diving into the concepts used in the article you provided:
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Blue-Chip Stocks:
- These stocks belong to companies with solid business models and a history of strong growth.
- They are typically stable, large-cap businesses that have stood the test of time, offering attractive returns over a long period.
- Blue-chip stocks are considered the cream of the crop and often trade at significant premiums due to their reliability.
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Market Volatility:
- The pandemic in the past year led to a chaotic trading environment, impacting stocks across the board.
- The S&P 500 experienced a significant downturn during the pandemic but has since recovered, with a 40% increase in the past 12 months.
- Despite the recovery, the market remains volatile, influenced by events such as the Reddit-induced short squeeze.
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Blue-Chip Stocks Under $20:
- The article lists blue-chip stocks that are currently trading under $20, potentially presenting investment opportunities.
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Listed Blue-Chip Stocks:
- Infosys (INFY): An Indian IT company with a focus on digital services, showcasing resilience during the pandemic and a positive outlook for the future.
- Bayer (BAYRY): A global life sciences company with an undervalued stock due to litigation issues but with potential for growth after resolving future claims.
- General Electric (GE): Undergoing a transformation to streamline operations and reduce debt, with prospects for redemption.
- China Life Insurance (LFC): Restructuring efforts starting to yield results, with strong revenue growth and significant upside potential.
- Barclays (BCS): One of the largest clearing banks in the U.K., showing signs of resurgence with diversified revenues and growth catalysts.
- Glencore (GLNCY): A Swiss-based commodity conglomerate that weathered 2020 well, poised for a comeback with favorable commodity prices.
- ICICI Bank (IBN): A prominent Indian bank with a digital edge, poised for success in a challenging loan growth environment.
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Financial Performance Metrics:
- The article provides various financial performance metrics for each company, such as revenues, operating margins, debt reduction, and growth expectations.
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Market Analysis:
- The article analyzes the potential for each stock, considering factors like industry trends, company strategies, and market conditions.
In conclusion, the article offers valuable insights into the current market dynamics, the performance of blue-chip stocks, and potential investment opportunities for those trading under $20.
