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3 blue chip shares at 52-week lows: Are they bargain buys?

With the market sinking notably lower today after heavy declines in the United States, a number of shares have fallen to 52-week lows.

Three blue chips that caught my eye are listed below. Have they fallen into bargain territory or are they best avoided?

The Challenger Ltd (ASX: CGF) share price fell to a 52-week low of $11.49 during morning trade. This means the annuities company’s shares have now dropped over 20% from their 52-week high of $14.42 they made in December. While I think Challenger is a quality company, I think its shares are still a touch overvalued and intend to hold out for a drop to around the $10.50 mark. Incidentally, earlier this week Morgan Stanley retained its underperform and $11.00 price target on Challenger’s shares.

The QBE Insurance Group Ltd (ASX: QBE) share price has drifted to a 52-week low of $9.52 on Wednesday. The insurance giant has continued to come under significant selling pressure after a series of disappointing results. I’m not a fan of insurance companies and QBE Insurance in particular. I think insurance companies are unreliable investments and would suggest investors look elsewhere in the market.

The Telstra Corporation Ltd (ASX: TLS) share price touched on a new multi-year low of $3.20 this morning. Concerns over NBN margins, competitive pressures in the mobile space, and the security of its current dividend pay-out have all weighed heavily on sentiment. In respect to the former, I’m optimistic that the Federal Government will write down the NBN, allowing telco companies to benefit from wider margins. This and its high quality mobile network, could allow Telstra to continue paying its 22 cents per share fully franked dividend for some time to come. At the current price, this works out to a yield of almost 6.9%.

As well as Telstra, I think these stellar stocks are in the buy zone after recent declines.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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