For young investors, blue-chip stocks may seem relatively dull. The action tends to be in the growth and penny stocks space. However, it will be a big mistake to ignore the value-creating upside blue-chip stocks provide, when constructing a long-term portfolio.

If the business story for a growth stock clicks, multi-bagger returns are in the offering. However, it’s not uncommon to see emerging stories fail, leading to massive stock plunges in short order. We’ve seen this play out time and again in recent years, highlighting the stability and steadiness blue-chip stocks create for a portfolio.

I would personally allocate 50% of my portfolio toward blue-chip stocks. That’s partly due to the multiple headwinds that have proliferated in equity markets since the beginning of 2022. These headwinds have created a situation where some high-quality stocks are now trading at very attractive valuations.

Exposure to these fundamentally strong blue-chip stocks makes sense, as there is visibility for healthy total returns (capital gains and dividends) over the long-term. Let’s discuss the reasons why these blue-chip stocks are worth considering.

Newmont (NEM)

As I write this article, gold has surged to $1,930 an ounce. Considering the ongoing concerns in the banking sector, sticky inflation, and the increased possibility of a recession, I expect this bullish momentum to sustain. Newmont (NYSE:NEM) is a quality gold miner to consider adding, for exposure to the price action of precious metals right now.

Currently, NEM stock trades at a forward price-earnings ratio of 21.2-times, with a dividend yield of 3.5%. Considering the upside potential with gold prices, I expect healthy dividend growth in 2023 and beyond.

Newmont Corporation has an investment-grade balance sheet and a quality asset base. With 96 million ounces in reserves, the company expects steady production into the 2040s. Newmont also hopes to lower its all-in-sustaining cost over the next few years. Thus, the company’s free cash flow upside will likely be significant if gold trends higher.

It’s also worth noting that Newmont closed 2022 with a liquidity buffer of $6.7 billion. Further, the company’s leverage ratio is low, at 0.5. With high financial flexibility, I would not be surprised if the company pursued opportunistic acquisitions to boost production.

Albemarle (ALB)

Albemarle (NYSE:ALB) is a massively undervalued blue-chip stock. I expect ALB stock to double in the next 12 months. To put things into perspective, the stock trades at a forward price-earnings ratio of 7.2-times, and is among the top dividend growth stocks to consider.

The company’s undervaluation is evident, when investors assess Albermarle’s growth trajectory. Last year, Albemarle reported 193% and 444% year-over-year growth in sales and adjusted EBITDA, respectively. The company has guided for sales growth from 55% to 75% for the current year. The company will also likely report operating cash flow of $2.2 billion for the year. With these metrics, the stock deserves better valuations.

Another point worth mentioning is that Albemarle closed 2022 with a lithium conversion capacity of 200ktpa. The company expects to boost production to 550ktpa (mid-range of guidance) by 2027. With continued upside in capacity, cash flow growth is likely to remain healthy over the long-term.

Chevron (CVX)

Chevron (NYSE:CVX) is another name to consider among undervalued blue-chip stocks. At a forward price-earnings ratio of 10-times, the stock is poised for meaningful upside from current levels. Additionally, CVX stock offers a rather juicy dividend yield of 3.9%.

It’s worth noting that oil has declined on recession concerns. However, CVX stock has held its ground, trading sideways over the last six months. This is an indication of the stock’s undervaluation. Once economic headwinds wane, CVX stock can easily trade above previous highs of $190.

From a fundamental perspective, Chevron is among the best oil and gas stocks out there. The company has an investment-grade balance sheet, bolstered by operating cash flow of $47.5 billion for 2022.

With low break-even assets, I think operating cash flow is likely to remain robust, even factoring in the recent decline in oil prices. This will continue to allow Chevron the ability to create value through dividends and share repurchases. Additionally, the company has ample flexibility to make significant capital investments to improve its metrics over time.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.