We recently compiled a list of the 10 Blue-Chip Stocks to Buy at 52-Week Lows. In this article, we are going to take a look at where BP p.l.c. (NYSE:BP) stands against the other Blue-Chip Stocks to Buy.

Despite the stock market indices hitting record highs this year, some stocks edged lower and are currently languishing near their 52-week lows. While it’s common practice to stay clear of stocks under pressure, it could sometimes be a costly error. When the shares of solid companies become unpopular due to macroeconomic factors and concerns, it presents a buying chance that value investors seize.

Deteriorating macroeconomics was the catalyst behind some blue chip stocks imploding in a year when the overall market traded higher. As the high interest rate environment helped push inflation close to the recommended 2%, some companies felt the blunt even as the S&P 500 rallied up to 17%.

READ ALSO: 8 Best Warren Buffett Stocks to Buy According to Analysts and 8 Best Value Stocks to Invest In According To Warren Buffett.

Companies whose core business depend on consumer purchasing power were the hardest hit as consumers became cautious amid the high inflation and liquidity pressures. Likewise, as the U.S. economy came under pressure amid the high interest rates depicted by a struggling U.S. labor market and manufacturing sector, investors shunned stocks in the consumer cyclical and energy sectors susceptible to deteriorating economic conditions.

Fast forward, the Fed swinging into action and initiating a 50 basis points interest rate cut to try and prevent the U.S. economy from plunging into recession has presented a new lease of life in the markets. According to market bull and head of research at Fundstrat Global Advisors Tom Lee, the Federal Reserve cutting cycle has the potential to set up the market for a strong rally heading into year-end.

Large-cap stocks, hard-hit by high interest, increasingly present undiscovered investment opportunities in a volatile market. Even though a stock that is at or close to a recent low may seem like a risky investment, large-cap stocks frequently reflect market sentiment rather than underlying problems.

With the overall market remaining bullish as interest rates around the globe drop, professional investors are increasingly taking note of the best blue-chip stocks to buy at 52-week lows. Astute investors know these large-cap stocks’ current valuations might not accurately represent their long-term potential, as most appear to be trading at a discount.

According to Canaccord Genuity analyst Michael Welch, the fourth quarter presents one of the best opportunities to buy undervalued stocks, as it is usually the strongest quarter for stocks. The fact that the quarter often ends positively in three of every four years underscores why investors should be bullish about blue-chip stocks that have pulled back significantly and are showing signs of bouncing back.

According to Welch, now is not the time to fight the Fed or the tape as the market shows signs of edging higher. The analyst believes now is the time to position one’s portfolio for a potential fourth-quarter rally. Investors have a unique opportunity to secure higher dividend yields and long-term capital gains when the market recovers and high-quality stocks bottom out after the recent slump.

Nevertheless, Lee of Fundstrat Global Advisors believes investors should be cautious as the uncertainty around the U.S. presidential election could turn out to be a significant headwind. The uncertainty around former president Donald Trump and Kamala Harris’s economic platforms should make the markets weary and curtail significant gains.

Our Methodology

To make our list of blue chip stocks at 52-week lows, we ranked large-cap firms trading on the NYSE and NASDAQ whose shares are trading at new 52-week lows or are at most 0-10% higher. The blue-chip stocks at 52-week lows with the highest market capitalization were selected, and their share prices are also mentioned. Finally, we ranked the stocks in descending order based on market cap.

At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

BP p.l.c. (NYSE:BP)

52 Week Range: $30.52 – $40.84

Current Share Price: $31.42

Number of Hedge Fund Holders: 38

Market Capitalization as of September 30: $83.75 Billion 

BP p.l.c. (NYSE:BP) is an integrated oil and gas company that produces and distributes oil and gas. It is one of the oil and gas heavyweights trading close to 52-week lows in the aftermath of oil prices falling under pressure and dropping to $70 a barrel.

Investors carefully monitor the energy behemoth as it negotiates a challenging environment that includes shifting oil prices, regulatory constraints, and the global shift to renewable energy sources. The 52-week low represents a pivotal point for BP p.l.c. (NYSE:BP), as investors evaluate the company’s tactical actions to steady and expand during the industry’s revolutionary phase.

The company has already inked a strategic partnership with Palantir Technologies that will allow it to leverage artificial intelligence technology. The push is part of the company’s bid to enhance its exploration and production ability using revolutionary technology.

BP p.l.c. (NYSE:BP) also plans to increase its footprint in India as it looks into more business opportunities in the quickly developing market. The company has confirmed strategic interest in the nation’s oil and gas industry to boost its stagnant oil and gas production. India is the third-largest oil importer and consumer in the world. It has also announced plans to sell off underperforming assets, starting with wind-generating holdings in the U.S. valued at about $2 billion.

Additionally, BP p.l.c. (NYSE:BP) delivered impressive second-quarter results with a free cash flow of $8.1 billion, which allowed it to reduce its net debt by $1.4 billion. The net profit in the quarter was $2.8 billion, which was above analysts’ expectations of $2.6 billion. The better-than-expected results resulted in the company increasing its dividend by 10% to $8 cents a share.

While the stock has underperformed, dropping close to its 52-week lows, it remains one of the best blue-chip stocks to buy at 52-week lows, going by its 6.11% dividend yield.

According to Insider Monkey’s database for the second quarter of 2024, 38 hedge funds held stakes in BP p.l.c. (NYSE:BP), a slight decrease from the 40 hedge funds that held stakes in the previous quarter. Despite this minor drop, the total value of these stakes remains substantial, exceeding $1.48 billion. This indicates that while a few hedge funds may have adjusted their positions, many institutional investors continue to see value in BP p.l.c. (NYSE:BP)’s stock.

Overall BP ranks 5th on our list of 10 Blue-Chip Stocks to Buy at 52-Week Lows. While we acknowledge the potential of BP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BP, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.