5 Blue-Chip Stocks on Sale

Everyone likes a sale, but most times, the really good stuff isn't marked down. It's similar in the stock market -- the blue-chip companies, the best of the best, are rarely on sale. But sometimes they are.

Sometimes the market falls to a point where some of the biggest and best companies trade at very cheap prices. We at The Motley Fool think this time is now, so we should be able to find some fantastic values out there.   

To look for such bargains, I used the screening tool found in CAPS, the Fool's community intelligence database of 115,000-plus investors.

CAPS weighs in
I screened for large-cap stocks with four- or five-star CAPS ratings (the best) and 200 or more active picks. To further winnow down the list to the best opportunities, I searched for stocks:

  • with a return on equity of 15% or higher (a good business),
  • near their 52-week lows,
  • and with a P/E of 17 or less (sign of a decent price).

And the contenders are ...

Company Name

Current CAPS Rating

Return on Equity (TTM)

Market Capitalization (billions)

Price-to-Earnings (TTM)

% Below 12-Month Low

3M (NYSE: MMM  )

*****

29.9%

$46.4

12.7

1.2%

ABB (NYSE: ABB  )

****

35.2%

$41.2

9.8

2.3%

America Movil (NYSE: AMX  )

*****

39.9%

$48.9

14.8

2.3%

United Health (NYSE: UNH  )

*****

19.7%

$31.0

7.2

0.0%

Walgreen (NYSE: WAG  )

*****

16.8%

$30.6

14.6

2.4%

Source: Motley Fool CAPS screener on Sept. 30. TTM = trailing 12 months.

These multibillion-dollar blue chips have high ratings in CAPS, good returns on equity, and trade near their 52-week lows, which can often be the best time to buy strong companies like the above. Would you rather buy a solid business like 3M at its 52-week high of $97 per share, or near its 52-week low of $65.51? If you answered the latter, now's your chance.  

Blue-chip companies like United Technologies (NYSE: UTX  ) or General Electric (NYSE: GE  ) might not go up 25% for you each year, but they shouldn't go down too much, either. If you can buy them at cheap prices (like now), you will greatly improve your prospective returns.

Come join us on CAPS to investigate these and countless other interesting stock ideas, and perhaps rate some stocks of your own. While you're there, you can play around with some CAPS screens, and see whether you can unearth a few other fantastically priced blue chips for your portfolio. 

On Oct. 7, 2008, Fool Co-Founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Fool analyst Andrew Sullivan likes blue chips  but does not have a financial position in any of the stocks mentioned in this article. America Movil is a Motley Fool Global Gains pick. UnitedHealth Group and 3M are Inside Value selections. UnitedHealth Group is also a Stock Advisor pick and the Fool owns shares. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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