Here Are 2 Blue-Chip Tech Stocks to Buy Now While They Are Cheap

Brexit is spooking the markets, putting these solid buy-and-hold forever companies on the discount shelf. Here is why investors should seize the opportunity and scoop them up.
By Chiradeep BasuMallick ,

The recent Brexit-related bedlam was a classic example of how fear can dominate rational thinking in the markets.

However, with this fear now taking a backseat, it is time to buy strong, yet still undervalued blue chips.

Here are two stocks that are must haves, and yet they are inexpensive. 

1. Apple (AAPL) - Get Report

It is hard to believe that technology titan Apple is down nearly 13% over the past three months. Superficial worries about phone sales and growth may have scared some investors.

But though Chief Executive Tim Cook may not be Steve Jobs, he is certainly no pushover, either.

At 10.6 times forward earnings, Apple is cheaper than Google parent Alphabet (17.64 times), Amazon (73.23 times) Facebook (24.82 times) and Netflix (93.85 times).

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That alone is enough reason to buy this financially strong investment with billions of dollars of cash, 9%-plus annual earnings growth outlook for the next five years and nearly 30% operating margins.

With the stock cheaper by nearly one-quarter than a year ago, Apple is a compelling buy. The 41 analysts with 12-month stock price forecasts for Apple have a median target of $120, a clear 25% moneymaking opportunity.

In addition, Apple offers a nearly 2.8% dividend yield. Three years of dividend growth and many more to come as well as a comfortable 27.5% payout ratio indicates the scope of higher dividends for Apple investors.

Meanwhile, legendary investor Warren E. Buffett's Berkshire Hathaway's Geico unit snapped up Apple shares at an average price of $99.49 each, and the stock is trading below that.

With a total return potential of close to 30%, buy this blue-chip stock now.

2. Intel (INTC) - Get Report

If it is Apple on the outside, it is Intel on the inside, and the chip giant is transforming itself into a company that can survive for the next 100 years.

A leaner mobile-device business and product lines and new steps to tighten its channel sales and marketing and adjust its reporting system are among the many moves that Intel has made. The company is also teaming up with BMW for self-driving cars and possibly selling its cybersecurity unit

Intel is betting big on the Internet of Things as the company steps into the post-personal computer transformation. In tune with the times, Chief Executive Brian Krzanich is re-building the PC-centric company into a modern business enterprise that powers the cloud and billions of smart, connected computing devices.

Seen in that light, Intel's announcement this year to cut 12,000 jobs in its largest workforce reduction in a decade is a bold move.

From barely 1% earnings-per-share growth annually in the past five years, analysts see Intel posting annual 10% growth for the next half a decade.

At 12.45 times forward earnings, Intel shares are down about 5% this year, making it a smart investment for the long term.

Intel's 3.18% dividend yield is a great bargain, given the company's solid finances. The stock has a double-digit total return potential over the next year.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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