Recurring Market Pullback Reveals Three Blue-Chip Buying Opportunities

Key Points

• Analysts anticipate Mastercard’s strong first-quarter performance will continue, undeterred by broader economic concerns.

• While McDonald’s leadership voiced caution about the economic climate in its latest earnings call, market reactions may be overstating the concern.

• Pfizer’s long-term prospects appear promising for investors willing to look beyond near-term challenges.

Initially, there appeared to be a chance for the market to rebound from its early June decline and revive its upward trend. However, that optimism has faded. The S&P 500 is once again losing ground, approaching a fresh multi-week low, dragged down by the same AI-driven stocks that previously fueled its ascent. Further declines could be on the horizon.

It’s important to maintain perspective. Such short-term weakness is not uncommon and, in fact, presents a chance to invest in blue-chip stocks that have experienced significant declines. Below, we examine three compelling candidates.

Mastercard

Mastercard (NYSE: MA) shares had already been declining prior to the recent market weakness. Currently trading 14% below their January peak, this drop stems from discussions about credit card interest rate caps, reduced consumer spending linked to geopolitical issues, and concerns over emerging payment rivals. Additionally, Mastercard’s management voiced slight apprehension during its April first-quarter earnings call, leading some investors to overlook the positive earnings surprise.

Nevertheless, the underlying fundamentals remain robust. Last quarter’s revenue grew 12% year-over-year, matched by a comparable rise in transaction volume, fueling robust earnings expansion that analysts project to continue through the current and upcoming fiscal years. The recent price decline appears more reflective of a valuation adjustment than a fundamental flaw in the company’s outlook.

McDonald’s

Similar to Mastercard, McDonald’s (NYSE: MCD) shares were declining prior to the latest market-wide downturn. The reasoning is straightforward: although the chain’s first-quarter revenue of $6.52 billion and earnings per share of $2.83 surpassed forecasts, CEO Chris Kempczinski warned shareholders in May’s earnings call that the macroeconomic environment and consumer sentiment are “certainly not improving, and may actually be deteriorating.”

Investors reacted strongly to these remarks, driving the stock price downward.

Image source: Getty Images.

That post-earnings decline may have essentially cemented a pullback that began in late February. Despite interim volatility, the stock has not suffered any net loss since that period. This presents an opportunity to acquire this reliable dividend-paying stock at a discount, with a forward dividend yield currently at 2.7%.

Pfizer

Consider adding pharmaceutical leader Pfizer (NYSE: PFE) to your list of blue-chip stocks worth buying during this broad market weakness.

Like McDonald’s and Mastercard, Pfizer’s shares were already trending downward before the wider market pressures intensified. This decline accelerated this month, initially following the departure of CFO Dave Denton, and was further exacerbated by underwhelming results from the sigvotatug vedotin clinical trial for lung cancer treatment. Consequently, the stock has fallen approximately 16% from its early April high.

Despite these near-term challenges, Pfizer continues to transform its pipeline and portfolio into a formidable force in oncology and obesity therapeutics, aiming to launch at least eight new blockbuster cancer medications. Meaningful growth is unlikely before 2028, pending approval of several of its 31 phase-3 pipeline candidates. As always, the market tends to reflect future promise in current valuations.

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