In this article, we discuss the 5 affordable blue chip stocks to buy now. If you want to read our detailed analysis of blue chip stocks and the current market situation, go directly to 10 Affordable Blue Chip Stocks To Buy Now.
5. Ally Financial Inc. (NYSE:ALLY)
Number of Hedge Fund Holders: 49
Share Price (as of June 13): $35.30
Ally Financial Inc. (NYSE:ALLY) is a digital financial services company which offers banking, investing and loan services related to mortgages, auto finance, and corporate finance.
Raymond James analyst David Long on April 18 lowered the firm’s price target on Ally Financial Inc. (NYSE:ALLY) to $50 from $57 and maintained an ‘Outperform’ rating on the company shares. Although Q1 results were “mixed” on account of lower fee income and elevated operating expenses, the analyst is pleased with the firm’s strong loan growth, net interest margin expansion, and capital return. Ally Financial Inc. (NYSE:ALLY) has grown its dividend payout for 5 years in a row, with a 3.52% yield as of June 14.
For the quarter ending March, Ally Financial Inc.’s (NYSE:ALLY) revenue stood at $2.14 billion, above estimates by $2.97 million. EPS of $2.03 also outperformed estimates by $0.10.
Out of the 900+ hedge funds in the database of Insider Monkey, Ally Financial Inc. (NYSE:ALLY) stock was reported in the portfolios of 49 hedge funds at the end of the first quarter, as compared to 48 hedge funds a quarter ago. The aggregate value of the Q1 hedge fund holdings stood at $2.43 billion. Berkshire Hathaway initiated a $390 million position in Ally Financial Inc. (NYSE:ALLY) in the first quarter, making it the firm’s second largest shareholder behind Harris Associates, which held a $1.15 billion stake in the company.
4. Antero Resources Corp (NYSE:AR)
Number of Hedge Fund Holders: 53
Share Price (as of June 13): $43.35
Antero Resources Corp (NYSE:AR) is an energy company based in Colorado, which deals in the production and marketing of oil, natural gas, natural gas liquids across the United States. The company has surged 174.86% in the last 12 months, and 114.55% in the year to date as of June 14, positioning it as one of the best affordable blue chip stocks to buy with shares priced at roughly $43.
Hedge fund sentiment was up on Antero Resources Corp (NYSE:AR) in the first quarter of 2022, where 53 hedge funds were stakeholders in the company with combined positions worth $1.37 billion. In comparison, 46 hedge funds owned stakes in the energy company a quarter ago.
On April 25, Raymond James analyst John Freeman kept a ‘Strong Buy’ rating on Antero Resources Corp (NYSE:AR) shares, and bumped the price target to $52 from $38. The company remains Freeman’s favorite natural gas/natural gas liquids exposed stock, who sees an improved free cash flow outlook as a result of the rise in energy prices.
3. Teck Resources Ltd (NYSE:TECK)
Number of Hedge Fund Holders: 56
Share Price (as of June 13): $40.15
Teck Resources Ltd (NYSE:TECK) is a mining company which deals in the production and supply of gold, copper, lead, steelmaking coal, and silver, as well as other metals, chemicals and fertilizers. Rising commodity prices position the company very well heading into the future, and in the last 12 months it has gained 79.95% as of June 14.
Deutsche Bank analyst Abhi Agarwal on June 9 reiterated a ‘Buy’ rating on Teck Resources Ltd (NYSE:TECK) shares, and bumped the price target to $52 from $48. The analyst noted, after meeting with company management, that the company is on “is on the cusp of a major shift” as the Quebrada Blanca Phase 2 project, one of the world’s largest undeveloped copper resources, starts delivering which will drive an increase in free cash flow generation. He also sees the company’s portfolio shifting from being primarily a met-coal miner to a base metal miner by 2025, which should drive a re-rating of the stock.
Investors were eager on Teck Resources Ltd (NYSE:TECK) in the first quarter, where 56 hedge funds reported ownership of positions in the company, as compared to 40 hedge funds a quarter earlier. Its largest shareholder in the first quarter was Soroban Capital Partners, with a stake worth $495 million.
Teck Resources Ltd (NYSE:TECK) announced its Q1 earnings on April 27, and reported earnings per share of $2.31, exceeding estimates by $0.06. Quarterly revenue of $3.93 billion also outperformed market estimates by $16.1 million, and showed impressive year-on-year growth of 89.76%.
2. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 64
Share Price (as of June 9): $61.80
The Coca-Cola Company (NYSE:KO) is one of the best blue chip companies in the world, boasting worldwide sales, strong brand loyalty and pricing power for its beverages and snacks products. Priced at around $61 per share, it is also one of the most affordable stocks to buy.
The fact that The Coca-Cola Company (NYSE:KO) has increased its dividend payments for the last 59 years in a row makes it even more attractive for investors to hold, and Warren Buffett’s Berkshire Hathaway owns 400 million shares of the company worth $24.79 billion, making it the firm’s largest shareholder. As of June 14, the beverage maker doles out a 2.97% yield to shareholders.
On May 9, research firm BofA added The Coca-Cola Company (NYSE:KO) to the firm’s “US 1” list, which is a collection of best investment ideas picked from among its coverage of US-listed stocks with a Buy rating. On April 26, Truist analyst Bill Chappell gave The Coca-Cola Company (NYSE:KO) a ‘Buy’ rating, and a revised price target of $75, up from $70. Chappell noted that the firm posted strong first quarter results with 18% organic growth, and reaffirmed its guidance for FY2022 despite increased cost pressures and headwinds from the Russia-Ukraine crisis.
For the first quarter, The Coca-Cola Company (NYSE:KO) posted earnings per share of $0.64, above estimates by $0.06. Quarterly revenue of $10.5 billion outperformed analysts’ expectations by $670.8 million and increased 16.44% in contrast to the same period over last year.
Out of the 900+ elite hedge funds tracked by Insider Monkey, 64 reported ownership of stakes in The Coca-Cola Company (NYSE:KO) at the end of the first quarter, with a collective price tag of $29.17 billion. This is down from 70 hedge funds a quarter earlier.
ClearBridge Investments, an asset management firm, mentioned The Coca-Cola Company (NYSE:KO) in its Q4 2021 investor letter. Here’s what it said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Share Price (as of June 9): $34.51
Bank of America Corporation (NYSE:BAC) is the second largest banking company in the United States, and part of the Big Four banking institutions alongside Citigroup, JPMorgan Chase, and Wells Fargo. Shares of the company are priced at around $34.5, making it one of the most affordable high-quality names to buy. BAC pays a 2.67% dividend as of June 14, and has increased its payouts for 8 years in a row.
In early May, Oppenheimer analyst Chris Kotowski urged investors to take advantage of Bank of America Corporation’s (NYSE:BAC) recent share price weakness and buy the stock. He noted that banks tend to do well when interest rates rise, and that they should remain “solidly profitable with their dividends intact” in the current macro environment. The analyst gave the stock an unchanged ‘Outperform’ rating and a $50 price target, down from $52.
For the first quarter of 2022, Bank of America Corporation (NYSE:BAC) posted revenue of $23.23 billion, which exceeded analysts’ forecasts by $135.8 million. EPS stood at $0.80, above market forecasts by $0.06.
At the end of the first quarter, 99 out of the 912 hedge funds tracked by Insider Monkey owned positions in Bank of America Corporation (NYSE:BAC), with a collective price tag of $45.43 billion. This shows an improving trend over the previous quarter where 84 hedge funds were long on the company shares. With a massive $41.6 billion position, Warren Buffett’s Berkshire Hathaway was the most prominent shareholder of Bank of America Corporation (NYSE:BAC) in the first quarter.
Investment firm Miller Value Partners talked about Bank of America Corporation (NYSE:BAC) in its Q1 2022 investor letter. Here’s what the fund said:
“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.
A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).
We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”
You can also take a look at Top 10 Energy Dividend Stocks To Invest In and 10 Best Stock Picks and Investments Of Billionaire Chamath Palihapitiya.
