Buying high-quality blue-chip stocks in a bear market could be a solid path to generating lucrative long-term returns. Blue-chip stocks are typically large-cap businesses in the mature stage of their business cycle. They boast solid business models, strong balance sheets, and positive free cash flow, which allow them to make significant dividend payments.
Therefore, blue-chip stocks offer stability to investor portfolios during economic uncertainty and market volatility. While they are particularly popular among conservative investors, more risk-tolerant investors could also consider buying blue chip stocks these days to add stability to their portfolios.
For instance, exchange-traded funds (ETFs) such as the ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) and the Fidelity Blue Chip Value ETF (NYSEARCA:FBCV) have lost about 7% and 4% so far in 2022. On the other hand, the S&P 500 index is currently down 13% year-to-date (YTD), compared with the 19% decline in the Nasdaq 100 index so far in 2022.
Meanwhile, the recent market downturn has created attractive blue-chip stock bargain opportunities even among the world’s most prominent companies. These businesses have survived past downturns and are well-equipped to cope with future volatility as well.
With that information, here are the seven blue-chip stocks that could help investors ride through the bear market this year.
| ABBV | AbbVie | $140.34 |
| BDX | Becton Dickinson | $255.97 |
| CI | Cigna | $281.77 |
| DD | Dupont De Nemours | $59.33 |
| MMM | 3M | $148.48 |
| JPM | JPMorgan Chase | $114.35 |
| PFE | Pfizer | $49.57 |
AbbVie (ABBV)
52-week range: $105.56 – $175.91
AbbVie (NYSE:ABBV), the first blue-chip stock on our list, is an important biopharma company. Aside from its popular aesthetic therapies like Botox and Juvederm, the medical giant focuses on key therapeutic areas such as immunology, neuroscience, oncology, eye care and virology.
Management released second-quarter results on July 29. Revenue increased by 4.5% year-over-year (YOY) to $14.58 billion. Adjusted diluted earnings per share, EPS, stood at $3.37, up 11.2% YOY.
AbbVie’s biggest cash cow, the rheumatoid arthritis drug Humira, is losing patent protection in 2023. Q2 revenue from Humira increased by 5.8% to surpass $5.3 billion despite rising competition from generics in international markets.
Meanwhile, revenues from the immunology and neuroscience portfolios have jumped 17.8% and 13.7%, respectively. Analysts expect Skyrizi and Rinvoq to replace Humira’s contribution to top-line growth. By 2025, these two drugs are forecast to generate more than $15 billion annually, outperforming Humira at its peak.
ABBV stock is up nearly 2% YTD and 20% over a 12-month period. The Dividend King currently generates a 4.1% dividend yield.
Shares are trading at a moderate valuation of 10.1 times forward earnings and 4.4 times sales. Meanwhile, the 12-month median price forecast for ABBV stands at $158.
Becton Dickinson (BDX)
52-week range: $229.24 – $277.29
Becton Dickinson (NYSE:BDX) develops and manufactures medical devices, supplies, and instruments. The company’s portfolio includes around 20,000 products.
Becton Dickinson announced third-quarter earnings on Aug. 4. Revenue increased 3.8% YOY on a currency-neutral basis to $4.64 billion. Adjusted diluted EPS came in at $2.66, up 16.7% YOY from $2.28. Cash and equivalents ended the quarter at $2.56 billion.
Wall Street has noted the company continued with its growth strategy that relies significantly on strategic acquisitions. For instance, in early June, it acquired Parata Systems for more than $1.5 billion, entering the high-growth pharmacy automation market segment by offering a unique set of technologies across the healthcare spectrum.
One of the most recent acquisitions was MedKeeper, a cloud-based pharmacy management applications provider. This acquisition highlights the company’s recent focus on high-technology pharmacy solutions.
BDX stock is up 1% YTD. Shares are trading at 19 times forward earnings and 3.5 times sales. The dividend yield currently stands at 1.4%. Analysts’ 12-month median forecast stands at $278.
Cigna (CI)
52-week range: $191.74 – $284.46
Next on our list of blue-chip stocks is the global health services group Cigna (NYSE:CI). The insurance juggernaut offers medical and dental insurance. Its customer base of 20 million members makes the company the fourth largest health insurer stateside.
The insurance play announced Q2 results on Aug. 4. It generated $45.5 billion in revenue, up from $43.1 billion in the prior-year quarter. Adjusted EPS came in at $6.22, up 19% from $5.24 in the year-ago quarter.
Cigna is expected to benefit from increasing global demand for health insurance benefits. Such growth will in part be driven by an aging global population as well as soaring healthcare costs. Management raised its EPS outlook for 2022 by 30 cents to come in at least $22.90.
According to Global Market Insights, the global health insurance industry is expected to deliver compounded annual growth rate (CAGR) of over 4.5%, well exceeding $3.9 trillion by 2027.
So far in 2022, CI stock is up 23%. Yet, shares are still trading at an attractive valuation of 12.4 times forward earnings and just 0.5 times sales. Meanwhile, Cigna offers a dividend yield of 1.6%. The 12-month median price forecast for CI stock is $311.
Dupont De Nemours (DD)
52-week range: $52.56 – $85.16
Specialty chemicals giant Dupont De Nemours (NYSE:DD) focuses on various key markets such as electronics, transportation, construction, and healthcare. Its most profitable segment and region are Electronics & Industrial and Asia-Pacific, respectively.
Dupont reported Q2 results on Aug. 2. Net revenue came in at $3.32 billion, representing 7% YOY growth. Adjusted EPS was 88 cents, up 11% compared with the year-ago quarter. Cash and equivalents ended the quarter at $1.44 billion.
The chemicals play saw a 9% increase in organic sales. Electronics & Industrial segment generated net sales of $1.53 billion, up 16% YOY. Pricing actions fully compensated for rising inflation costs in raw materials, logistics, and energy.
Meanwhile, in late July, Dupont opened a new Liveo Healthcare Solutions manufacturing site at the Cooper River Site in South Carolina. Wall Street will be paying close attention to how DD’s new facility will add to top-line growth.
DD stock is down 27% YTD. The price level currently supports a 2.2% dividend yield. Shares are changing hands at 18.1 times forward earnings and two times sales. Wall Street’s 12-month median price forecast for DD stock stands at $76.
3M (MMM)
52-week range: $125.60 – $202.77
Industrial giant 3M (NYSE:MMM) develops products for consumers, industry, health care, and worker safety. It manufactures roughly 60,000 products under well-known brands such as Post-It, ACE, Command, and Scotch.
In late July, 3M reported Q2 financials. Sales totaled $8.7 billion, down 3% year-on-year (YOY). Adjusted earnings were $2.48, compared to $2.75 the year before. Adjusted free cash flow was $1.0 billion, down 41% YOY.
Organic sales increased just 1% YOY due to the lockdowns in China and falling global demand for its face masks. Yet, 3M’s earnings and guidance came in better than market forecasts. Management anticipates full-year organic sales growth to come in at 1.5% to 3.5%.
Meanwhile, 3M is spinning off its healthcare division as a stand-alone public company. The transaction is expected to be finalized by the end of 2023. The transaction aims to reduce leverage and free up liquidity by transferring debt onto the spinoff.
The Dividend King has hiked its payout for 64 consecutive years and currently supports a 4% dividend yield. So far in 2022, MMM stock is down 17%.
Shares offer a compelling buying opportunity at 13.9 times forward earnings and 2.4 times sales. Wall Street’s 12-month median price forecast for MMM stock stands at $145.
JPMorgan Chase (JPM)
52-week range: $106.06 – $172.96
Next on our list of blue-chip stocks is the global financial powerhouse JPMorgan Chase (NYSE:JPM). JPMorgan is the largest bank stateside. Its market capitalization (cap) stands well over $335 billion.
JPMorgan issued Q2 results on July 14. Revenue increased 1% YOY to $31.6 billion. Net income came in at $8.6 billion, down 28% YOY.
In the second quarter, net interest income (NII) came in at $15.2 billion, up $1.3 billion from the prior quarter. Management also raised its 2022 NII guidance.
However, investment-banking revenue plunged by almost $2.1 billion YOY as initial public offerings came to a halt in 2022. Moreover, the bank suspended share buybacks to quickly respond to capital growth needs outlined by the Federal Reserve’s recent stress test.
So far in 2022, JPM stock is down roughly 27%, generating a robust dividend yield of 3.5%. Shares offer value at 10.1 times forward earnings and 1.3 times book value. Meanwhile, the 12-month median price forecast for JPMorgan stock is $135.
Pfizer (PFE)
52-week range: $40.94 – $61.71
Last on our list of blue-chip stocks is the global pharma giant Pfizer (NYSE:PFE). The company has more than 350 drug offerings, with nine that boasted sales higher than $1 billion in 2021.
Pfizer reported Q2 results on July 28. Revenue jumped 47% YOY to $27.7 billion, the highest quarterly revenue in Pfizer’s history. Adjusted diluted earnings per share came in at $2.04, representing an impressive 92% YOY growth.
Comirnaty, the Covid-19 vaccine jointly developed with BioNTech (NASDAQ:BNTX), generated more than $8.8 billion in sales, up 20% YOY. In early July, the company received full U.S. Food and Drug Administration (FDA) approval for offering the vaccine to adolescents between 12-15 years of age. Wall Street will be paying attention to how vaccine sales will contribute to the firm’s bottom line in the fall when Covid cases could rise again.
Meanwhile, the antiviral Covid-19 therapy Paxlovid sales surpassed $8.1 billion in the second quarter. A recent decision by the FDA to allow authorized state-licensed pharmacists to prescribe the pill is forecast to boost sales through the second half of 2022.
PFE stock is down almost 17% so far in 2022 yet remains up 9% over the past year. Shares are trading at 7.7 times forward earnings and 2.8 times sales. The dividend yield currently stands at 3.25%. Analysts’ 12-month median forecast for Pfizer is at $55.
On the date of publication, Tezcan Gecgil, Ph.D., is both long and short BNTX stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.