The 2022 stock market downturn has created the opportunity to enter long-term positions in various stocks at bargain prices. After looking at the best cheap micro-cap and mid-cap stocks out there, let’s turn our attention to cheap blue-chip stocks.

Typically, blue chips or shares in venerable, well-established companies aren’t cheap. That’s not to say they are usually overvalued or that investing in blue-chips results in subpar returns if you do not buy them at a discount.

As the famous Warren Buffett quote goes, “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

But what if you can buy a “wonderful company” at a more-than-fair price? There may be the opportunity for even more substantial long-term returns. First, market conditions normalize, resulting in discounted blue chips returning to fair prices. Then, steady gains from price appreciation and dividends over a longer timeframe.

So, what are the best cheap blue-chip stocks out there today? Consider these seven, each a high-quality business currently trading at a low valuation.

British American Tobacco PLC (BTI)

Blue-chip tobacco stocks like British American Tobacco PLC (NYSE:BTI) trade at low valuations even in a bull market. This, of course, is due to the industry’s cash cow product, cigarettes, being in secular decline. There is high uncertainty as to whether “big tobacco” can still thrive in a post-cigarette future.

Yet recently, BTI stock has fallen to a meager price. Today, you can buy this global tobacco giant (whose brands include Camel and Newport) for only 8.1x forward earnings. Besides being cheaper than the overall market, BTI is also cheaper than peer Altria Group (NYSE:MO), which trades for around 8.6x forward earnings.

Not only that, unlike Altria, which lost billions on its Juul Labs investment, British American Tobacco has demonstrated success in diversifying its product mix beyond cigarettes. This may leave it well-positioned to maintain (and grow) its high-yield dividend of 7.99%.

Alphabet (GOOG, GOOGL)

It may be a relatively young company and may not pay a dividend, but it’s apt to say Google parent Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is a blue-chip stock. This is due to several factors, including a deep economic moat, high operating margins, and a strong balance sheet.

You may agree that GOOG stock is a blue-chip, yet disagree that it’s one of the cheap blue-chip stocks. I’ll agree with you that this stock is not “undervalued” on an absolute basis, as it trades for 18.8x earnings, in-line with major indices like the S&P 500,

However, Alphabet’s current earnings multiple may overestimate how long its main digital ads business remains in a slump and underestimate the company’s potential to re-accelerate earnings growth. Shares have strong rebound potential once the digital ad market recovers and Alphabet’s other growth catalysts start to play out.

IBM (IBM)

While Alphabet is an ascending tech blue-chip, IBM (NYSE:IBM) is a blue-chip tech “dinosaur.” At least, that’s still the market’s perception of this more than century-old technology company.

Trading for 19.3x earnings and with a forward dividend yield of 5.44%, critics of this stock will warn you that it’s a value trap and possibly a yield trap. Yet despite the poor performance of “Big Blue” over the past decade (down nearly 38.5%), the next ten years could be much more stellar for IBM stock investors.

Why? Chalk it up to its in-progress transformation into primarily a hybrid cloud computing company. Through bolt-on acquisitions, IBM continues to bulk up its presence in the hybrid cloud space. Steadily helping it become a faster-growing company, this could result in a move to substantially higher prices for IBM stock in the coming years.

JPMorgan Chase & Co. (JPM)

As InvestorPlace’s Joel Baglole recently discussed, JPMorgan Chase & Co. (NYSE:JPM) has been hammered by the market’s worries about a recession. These worries have outweighed the tailwind for this banking giant, which is the sharp rise in interest rates, which points to increased profitability.

However, one can argue that these recession worries are already fully-factored into the valuation of JPM stock. Shares in the money center bank currently trade for 9.7x the estimated 2022 earnings. However, this valuation doesn’t look at first glance as a big discount, towards the low end of its valuation over the past five years.

If JPMorgan Chase can weather today’s economic storms and capitalize on the current rising rate environment, future operating results could be stronger-than-expected. One bank stock analyst (Citi’s Keith Horowitz) anticipates this. A series of earnings beats could enable JPM to rise on a re-rating.

Pfizer (PFE)

If searching for cheap blue-chip stocks on a screener, chances are one of the first ones you’ll find is Pfizer (NYSE:PFE). The pharmaceutical giant trades at a super-low valuation (only 8.28x earnings), although there is a caveat.

You can say earnings in 2021 and 2022 were “boosted” by the rollout of its Covid-19 vaccine, which the company co-developed with BioNTech (NASDAQ:BNTX). With the vaccination wave long since passed, Pfizer’s earnings are set to drop.

However, even with an expected drop in earnings per share (or EPS) from $6.49 to $5.09 next year, PFE stock is still cheap. Based on next year’s estimates, Pfizer trades for 8.5x earnings. There may be room for shares to move higher, towards a valuation on par with other pharma stocks. Pfizer’s peers trade at a valuation closer to ten times earnings.

Verizon Communications (VZ)

Rising interest rates have put pressure on telecom stocks, which investors buy mainly for their high dividends. Verizon Communications (NYSE:VZ) may not be as popular as AT&T (NYSE:T) among dividend investors, yet this factor has pushed this “Baby Bell” nearly 28% lower year-to-date.

If rates keep rising, VZ stock will likely slide lower. However, if you’re bullish rates aren’t going much higher from here, and are looking to scoop up dividend stocks at attractive valuations, now may be the time to buy.

Verizon’s forward dividend yield currently comes in at around 7.08%. That’s only slightly less than AT&T’s current forward yield around 7.43%. Not only that, as I’ve argued previously, VZ beats T stock in areas like dividend coverage and dividend growth. Trading for only 7.4x earnings, while higher than AT&T’s current multiple of 5.6x, VZ is cheap, even among cheap blue-chip stocks.

ExxonMobil (XOM)

Up until the start of this month, ExxonMobil (NYSE:XOM), like other oil stocks, was pulling back. This was in tandem with the slide in crude oil prices due to concerns that a recession-driven drop in demand would outweigh the impact to supply caused by Russia’s Ukraine invasion and subsequent sanctions.

However, so far in October, oil (and XOM stock) have started to bounce back. Hopes of oil prices “returning to normal” have been dashed as OPEC and its allies have agreed to production cuts. This could counter any impact on demand from a recession, enabling prices to stay high.

In turn, enabling ExxonMobil’s current level of profitability to continue. Currently trading at a discounted valuation of 11x earnings, in anticipation of a drop in oil prices, XOM could move higher due to multiple expansions. The company’s capital allocation plan may also help move the needle over a longer timeframe.

On the date of publication, Thomas Niel held a long position in MO. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.