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3 Blue-Chip Stocks to Buy on the Dip: May 2024

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Despite a recent slowdown, the future of the U.S. economy appears promising. Economists remain optimistic, citing resilient consumer activity as a driving force for continued growth. While the latest Commerce Department report showed a notable deceleration in GDP growth, experts attribute much of this to robust spending on imported goods, indicating sustained domestic demand. Although inflation remains a concern, with prices rising rapidly, there’s confidence that the Federal Reserve will navigate these challenges effectively. The potential for interest rate adjustments presents an opportunity to balance economic growth while addressing inflationary pressures, offering a silver lining amidst uncertainties. Today we’re looking at some great options in blue-chip stocks to buy on the dip.

With this optimistic belief in economic growth and strength, now is the time to invest in companies that are at a discount. Even better are blue-chip stocks, as they are solid and stable with great ability to drive back profits. Because, after the rebound, you will be too late. These three blue-chip stocks to buy on the dip are sure to bounce back and bring you significant profits.

Pfizer (PFE)

Pfizer logo on Pfizer building. Pfizer is an American pharmaceutical corporation.

Source: Manuel Esteban / Shutterstock.com

Pfizer (NYSE:PFE) is one of the largest global pharmaceutical companies. Based in San Francisco, it has operations on six continents. Currently valued at over $28, Pfizer is heavily undervalued in an overall down market, but it has enormous profitability ahead.

Despite a post-Covid-19 rebound, the pharmaceutical industry is still expected to climb in this decade. Starting at $510.5 billion in 2022, the revenue figure is slated to reach $863.6 billion by 2030. During the seven years between 2023 and 2030, a projected CAGR of 7.8% was recorded in the industry, forecasting sizeable market growth in the upcoming years.

Despite year-over-year declines in some metrics, Pfizer’s financials outperformed industry estimates substantially in Q1 2024. PFE brought in $14.88 billion on top of revenue, with a reported figure of $3.12 billion in net income. Further, diluted EPS took a dip, reaching $0.55. However, the PFE Q1 2024 earnings call announced that PFE’s financials outlasted consensus industry forecasts by 6.87% on revenue and 59.65% on EPS.

Looking past the valuation decay year to date, PFE looks to be a promising investment based on a new initiative into the cancer treatment market rather than staying focused on Covid-19 relief as it has in the past three years. With the recent acquisition of Seagen last year, Pfizer looks to expand its cancer drug pipeline to a total of 60 developmental pipelines, with projections for promising results throughout the next five years. This heavy emphasis on long-term success and short-term cost-cutting has PFE investors ready to jump on the undervalued stock.

Hershey (HSY)

Hershey's milk chocolate pieces on a white plate on top of a wooden table

Source: shutterstock.com/VG Foto

Hershey (NYSE:HSY) is an global leader in manufacturing and selling confectionary products. The company has three segments: North America Confectionery, Salty Snacks and International. Currently, it is trading at over $208, down 20.84% over the last year.

Earnings and profits have been rising consistently over the last few years. Since this company offers chocolate internationally at region-based pricing, sales and revenue are expected to keep growing. This is evident through a YOY increase in revenue of 8.90%. Additionally, 82.09% of all shares are held by institutions, indicating high industrial confidence.

The global confectionary sector is expected to grow at a CAGR of 5.8%, reaching $419.76 billion by 2032. This promising growth trajectory provides a suitable ramp through which Hershey can grow. Hershey’s dividends significantly contribute to investor confidence, at a dividend yield of 2.7%, with 72% of its free cash flow going towards dividend spending. Expressive new products like themed Kit-Kats will also ensure consistent revenue growth. 

With HSY down 21.24% over the last year and many outstanding shares held by institutions, this blue-chip company is a great one to buy.

Caterpillar (CAT) 

Caterpillar (CAT) excavator vehicle backlit by sunset. Blue-Chip Stocks to Buy on the Dip

Source: Shutterstock

Caterpillar (NYSE:CAT) is a leading construction and mining equipment manufacturer. Its stock is valued at $356.27, down 6% from last month.

Caterpillar dominates construction in the U.S. with a 13% market share. The global construction market expects a CAGR of 5.9% from 2024 to 2030. Caterpillar, one of the most recognizable construction brands, proudly holds a market cap of $174.235 billion. 

Caterpillar reported outstanding financial figures ending the fiscal year 2023. The company reported a 12.84% YOY growth in revenue. Additionally, the company saw 54.14% and 59.18% YOY growth in net income and diluted EPS, respectively. Caterpillar had a 10.67% leveraged FCF margin, outperforming the sector median at 6.53% by a 63.38% difference.

Caterpillar plans to conduct a $725 million expansion to its Large Engine Center in Lafayette, Indiana. The center manufactures engines for oil, gas, mining, etc. This expansion will help the company produce more machinery and would be one of the most significant investments in Lafayette since its original construction. Projects like these have helped Caterpillar stay ahead of the competition and produce unbeatable profits and margins. Therefore, Caterpillar is one of the best blue-chip stocks to buy on the dip.

On the date of publication, Michael Que 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.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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