5 Most Undervalued Bluechip Stocks to Add to Your Watchlist

You'd be better off investing in mid- and small-cap companies if you want fast-paced growth and potentially high returns in the short term. But, like any savvy investor, you'll want to make sure your portfolio is well-balanced, with an asset allocation that provides stability even in the face of adversity.

This is the point at which blue-chip firms enter the picture. Bluechip corporations have strong fundamentals, substantial market capitalizations, and enviable reputations. You've probably heard of these companies as a customer or an investment. Because of their extended market presence, you are familiar with their items.


Above all, these stalwarts have a track record of well-managed operations, are financially solid, consistently grow revenue, and are resilient to market fluctuations and economic downturns. These are some of the most highly sought-after stocks in the country. You should have some of these stocks in your portfolio whether you're a rookie or a seasoned investor. However, the widespread consensus is that acquiring these equities will be prohibitively expensive.

Some of these bluechip stocks are prohibitively expensive. However, this isn't true of all bluechip companies. We discovered a couple of bluechip stocks that are significantly discounted using Equitymaster's Stock Screener. Take a look at their price to earnings (P/E) and price to book value (P/B) ratios to discover how far below their inherent value they are trading. These 5 inexpensive bluechip stocks should definitely be on your watchlist in 2022 if you're looking for a bargain investment opportunity.

#1 Tata Steel

Despite the dismal macroeconomic situation, steel prices have remained stable. Furthermore, steel demand around the world is approaching pre-pandemic levels. The Indian government is also increasing infrastructure spending, which is supporting domestic demand in this sector. This puts Tata Steel at the top of our list of inexpensive bluechip stocks to keep an eye on this year. Tata Steel, a subsidiary of the well-known Tata Group, reported its highest ever consolidated EBITDA of $308.9 billion in the third quarter of fiscal year 2022, up 71% year on year (YoY). The company's shares are currently trading at 5.4 times earnings (P/E) and 1.4 times book value (P/B) for the last twelve months. Tata Steel's historic P/E average is 6.4, while its P/B is 1.5.

The company serves to the demands of several customer sectors in the construction, automotive, industrial, and general engineering industries in India and internationally with a comprehensive product portfolio. With a profit rise of 101.8 percent in fiscal year 2021, the company is focusing on maximising returns for all of its stakeholders. The company is prioritising the creation of products that are in step with changing client desires, thanks to its robust balance sheet. In the last five years, Tata Steel has worked hard to reduce debt and maintain an effective average operating margin of 27.1%.

#2 Oil & Natural Gas Corporation

Many countries will need to rethink their oil and gas strategies in the face of increasing geopolitical tensions. As a result, enterprises that pump oil or gas appear to have a good chance of seeing a price increase. If you're an investor with good quality, frontline equities in this sector, it's advisable to hold on to them until the dust settles a bit. The oil and gas industry, on the other hand, is a sector to examine if you have liquid funds and are looking for fresh investment prospects in this environment.

In a year, the stock price of ONGC has increased by 58%. Since the beginning of 2022, it has increased by 14%. The stock has a trailing twelve-month P/E of 5.7 and a P/B of roughly 0.9, which is significantly lower than the industry average P/E of 8.6 and P/B of 5.1. It has a dividend yield of just over 3%. Currently, the stock is selling at 2x the anticipated EV/EBITDA for the fiscal year 2023.

#3 Bharat Petroleum Corporation

With operations in both refining and marketing, BPCL currently has a 24.4 percent market share in India. It has a well-balanced portfolio of refineries and marketing infrastructure that produced 32.9 MMT and 39.1 MMT of output in fiscal year 2021, respectively. Improvements in refining and marketing margins, increased revenues from marketing inventories, and the sale of Numaligarh Refinery Limited (NRL) have resulted in gross sales of 3,018.7 billion for the company.

With a profit before tax (PBT) of 226.2 billion in fiscal 2020-21, the corporation made history with a fantastic financial performance. In the fiscal year 2021, the company saw a profit increase of 609.7%, with an average profit growth of 33.7 percent for the previous three years. The company has a track record of consistent growth and sustainable debt, making it a viable contender on our list of inexpensive bluechip stocks to watch in 2022.

#4 Indian Oil Corporation

IOC has a long and illustrious history in India, accounting for the majority of the country's petroleum product consumption. Despite being a Maharatna energy business, IOC has a P/E ratio of 4.7, which is much lower than the industry average of 13.8. The P/B ratio is 1, which is significantly lower than the industry average of 2.7 (P/B). IOC has a large geographical footprint, with companies in seven countries. It controls 32.2 percent of the country's refining capacity, or 80.6 MMT.

In December 2021, the corporation reported its highest-ever profits of 58.61 billion dollars. From December 2020 to December 2021, there was a 16 percent year-on-year (YoY) increase. High operating margins, a strong distribution network, and pipeline capex expansions are all important growth drivers. IOC has a close relationship with the Indian government, which benefits the firm. IOC will be a vital stakeholder in government projects such as 'Atmanirbhar Bharat,' which would reshape the country's energy destiny. In 2022, inventory gains are predicted to increase by 25% on average. The election-driven retail price freeze in cars and LPG is expected to eat into marketing margins.

#5 NMDC

The metals and mining sector has recently become the market's darling. Everyone wants a piece of this pie, whether they are retail, institutional, or HNI investors. The global price of iron ore, according to experts, will not fall below $100 per metric tonne. However, there have been some ups and downs in this sector, resulting in value corrections. This makes NMDC an appealing investment opportunity.

Diamond mining has widened NMDC's horizons. In Panna, Madhya Pradesh, it operates India's sole merchandised diamond mine. It has recently expanded into steel production and taken on a number of high-value projects, allowing it to maintain its dominance in the home market. NMDC has maintained strong operating profitability despite its decreased cost of production. Over the last three years, the company has had a profit increase of 18% and a Return on Capital Employed (ROCE) of 26.9%. The clientele of the organisation is diverse. As a result, there's a good chance the company will be able to enhance its working capital and cash flow in the next months. Most critically, there is very little debt on the books of the corporation. Furthermore, given the current state of the global iron ore market, NMDC is likely to do well in the next years.

Happy Investing!


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