Blue-chip stocks become cheap

Associated Press

NEW YORK

This is a good time to make money off of someone else’s misfortune.

One of the best, but rarely followed, rules of investing is to buy when things look bleak. Blue-chip stocks in the euro zone are down 5.5 percent since it became clear in mid-April that Greece needed help to prevent it from defaulting on its debt. Some economists speculate that the bailouts of Greece and Ireland mean that the euro won’t last much longer.

Investors are waiting to see whether the European Central Bank takes additional steps this week to prevent Europe’s financial crisis from spreading to Spain and Italy. That uncertainty has created stock bargains. You may not find the same parade of once-in-a- lifetime deals as during the 2008-09 financial crisis when General Electric Co. traded as low as $7.06 (it closed at $16.78 Friday). But the broad retreat from anything associated with Europe means that there are easy pickings.

Take French oil giant Total SA. It has fallen 21 percent this year and is trading at a price- earnings ratio of only 8.3.

At $51.34, the stock costs about what it did during the financial crisis in October 2008. It comes with a dividend yield of 4.9 percent. Competitor BP PLC, meanwhile, doesn’t offer a dividend.