It Still Pays to Buy Blue Chips on th...
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Jonathan Yates
It Still Pays to Buy Blue Chips on the Dips for the Long Term

While the bull market since March 2009 as made many investors look brilliant, there is still much to be said for buying blue chip stocks on the dip. Recent articles on this site have emphasized this for Boeing (NYSE: BA), Microsoft (NASDAQ: MSFT), and oil stocks such as Petrobras (NYSE: PBR). The chart below shows how Boeing and Petrobras have rebounded.


YPF (NYSE: YPF) is another major oil company that has climbed back to reward those who bought on the dip to hold for the long term.

Based in Argentina, YPF has suffered from the poorly conceived economic policies of its government.  Nothing new there as Argentina has often bee plagued by terrible rule.  The actions by the government took a severe tool on the share price of YPF, as it fell more than 70% from its peak in 2011.

But as the chart below shows, YPF has come back strongly.

So have many other stocks, too.  But YPF is still undervalued, both for sales and its assets.  In addition, future earnings growth is selling at a 30% discount in the present stock price.

Like Boeing and Petrobras, YPF pays for shareholders to wait for the stock price to recover.  At present, the average dividend yield for a member of the Standard & Poor’s 500 Index is around 2%.  The dividend yield for YPF is around that mark.  However, its payout ratio if far below the average, meaning there is plenty of cash flow to increase the dividend and initiate share buyback programs to reward those owning the stock.

This year has already been rewarding enough for those owning YPF stock.  For 2013, YPF is up more than 12.%.


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