To identify undervalued blue-chip stocks, it's essential to understand what constitutes a blue-chip stock and the criteria analysts use for valuation. Blue-chip stocks are generally defined as shares of large, well-established, and financially sound companies with a long history of reliable performance and often, dividend payments [1] [2]. These companies typically have a large market capitalization, often exceeding $10 billion, and are components of major market indexes like the S&P 500, Dow Jones Industrial Average, or Nasdaq 100 [2].

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Analysts and investors look for undervalued blue-chip stocks by assessing various financial metrics. A common approach involves looking for stocks with a forward Price-to-Earnings (P/E) ratio less than 20 and an analysts' price target upside of more than 5% [1]. Additionally, the popularity of a stock among hedge funds can be an indicator, as their investment choices often reflect thorough research and potential for outperformance [1].

Based on recent analyses, here are some blue-chip stocks that have been identified as undervalued:

• Wells Fargo & Company (NYSE: WFC): As of June 19, 2025, Wells Fargo had a forward P/E of 11.21 and an analysts' price target upside of 8.83% [1]. The company is a diversified financial services firm offering banking, lending, investment, and wealth management services [1]. Recent developments include a partnership with i2i Logic to enhance commercial banking services through the i2i Logic Client Intelligence Platform, aiming to improve banker efficiency and client experience [1].

• AT&T Inc. (NYSE: T): As of June 19, 2025, AT&T had a forward P/E of 12.38 and an analysts' price target upside of 10.27% [1]. AT&T is a telecommunications and technology company providing wireless and wireline services, broadband internet, and business connectivity solutions [1]. A notable recent product launch is AT&T Business Voice, a cloud-based VoIP solution designed to modernize communications for small and medium-sized businesses by replacing traditional analog phone lines [1].

• Merck & Co. Inc. (NYSE: MRK): While specific valuation metrics like forward P/E and price target upside were not provided in the context, Merck & Co. Inc. has also been cited in lists of undervalued blue-chip stocks [3]. The broader market sentiment, influenced by factors like inflation, employment trends, and Federal Reserve policies, can impact the valuation of such companies [3]. Experts suggest that despite unusual timing for rate cuts during periods of high stock market performance, the Fed's focus remains on employment and price stability, which can indirectly affect blue-chip valuations [3].

It's important to note that while blue-chip stocks are known for their stability and reliability, they are not immune to market downturns [2]. Diversification across various types of companies and industries remains a key strategy for investors [2]. For those seeking exposure to blue-chip stocks without individual stock selection, large-cap index funds or Exchange Traded Funds (ETFs) that track indexes like the S&P 500 or Dow Jones Industrial Average can be a suitable alternative [2].

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