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Recognized for their resilience and fiscal prudence, blue-chip stocks have long been synonymous with durability and reliability in the tumultuous world of finance. Nevertheless, the stock prices of these sturdy titans, revered for their consistent growth and profitability, can, on occasion, plummet below intrinsic values due to unforeseen challenges and setbacks.
Ford Motor: Driven to Adapt
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Despite being in the fast lane of the evolving EV landscape, Ford Motor (NYSE:F) remains firmly in the race with its strong brand, loyal customer base, and ambitious electrification ventures. The automotive realm is undergoing a rapid transformation, marked by shifting consumer preferences towards EVs and technological advancements in autonomous driving. Consequently, players like Ford are tasked with navigating these dynamic shifts.
In the fourth quarter, Ford reported $46 billion in revenues, a 4% year-over-year (YOY) increase primarily fueled by consistent vehicle volumes. However, a $1.7 billion pre-tax, non-cash pension plan revaluation led to a $526 million net loss. Non-GAAP earnings dipped to 29 cents per share from 51 cents in the previous year’s quarter. Notably, adjusted free cash flow surpassed expectations at $6.8 billion.
Ford’s forward-looking strategies encompass cost reductions and quality enhancements to augment market share and spur future growth. Despite a marginal year-to-date (YTD) decline of nearly 1%, F stock finds itself trading at seductive valuations of 0.3 times sales (P/S) and 6.5 times forward earnings. Analysts’ consensus price target for F shares hovers at $13, indicating a potential 9% upside. Furthermore, Ford Motor presently boasts an enticing dividend yield of approximately 5%.
Citigroup: Navigating Choppy Waters
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Among the stalwarts in our blue-chip lineup, Citigroup (NYSE:C), the parent entity of Citibank, possesses a commanding global footprint, catering to over 100 million clients worldwide. However, investors harbor apprehensions regarding macroeconomic perils on a global scale and potential deceleration in the U.S. economy.
Citigroup’s recent financial performance paints a somewhat bleak picture. In the fourth quarter of 2023, the banking behemoth logged a net loss of $1.8 billion or -$1.16 per diluted share, contrasting with a $2.5 billion net income a year ago.
To steer towards future prosperity, CEO Jane Fraser launched an extensive restructuring initiative, primarily zeroing in on cost containment and digital modernization. The forecasted 2024 revenue range of $80 to $81 billion underscores management’s confidence in this strategic overhaul. The bank is poised to wind down inefficient and less lucrative segments, freeing up funds for strategic ventures such as bolstering international wealth management and investment banking.
Citigroup shares have returned approximately 8% year-to-date and are trading at a valuation of 9.4 times forward earnings, with a price-to-book (“PB”) ratio of 0.56. The 12-month median price projection for C stock rests at $60.50, hinting at a potential upside of about 9%. Furthermore, the banking titan boasts a dividend yield of 3.8%.
Schlumberger: Navigating Energy Tides
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Global player in oilfield services, Schlumberger (NYSE:SLB), collaborates with upstream energy entities to pinpoint oil and gas reserves, drill wells, and appraise hydrocarbon deposits. Consequently, the firm enjoys consistent revenue streams and dividends despite the undulating energy markets.
In January, Schlumberger unveiled robust results for the fourth quarter and full year 2023. Quarterly revenues totaled $8.99 billion, surging 8% sequentially and 14% YOY. Similarly, the annual revenue of $33.14 billion marked an 18% YOY increase. Subsequently, the energy services giant boosted quarterly dividends by 10%, culminating in a current dividend yield of 2.25%.
However, SLB stock has witnessed a 7% YTD decline, with shares transacting at 13.6 times forward earnings and 2.1 times trailing sales. The 12-month average price prediction for SLB stock stands at $67.7, indicating a lofty upside of 39% from present levels.
As of the publication date, Tezcan Gecgil did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The viewpoints expressed in this article are of the writer and adhere to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, PhD, commenced contributing to InvestorPlace in 2018, bringing over two decades of experience from the U.S. and U.K. and completing the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.
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