I’m looking for undervalued blue-chip stocks to buy. Three criteria come to mind when it comes to blue-chip stocks.

First, they’re part of the S&P 500. However, that doesn’t mean they’re blue-chip stocks. For example, the company in the index with the smallest market capitalization is Newell Brands (NASDAQ:NWL) at $3.44 billion. It might be a decent-sized company, but it hasn’t been blue-chip for over a decade.

The second criterion is that they pay a dividend. Again, they don’t have to be a member of the elite Dividend Aristocrats club, but they should be growing their payout.

Lastly, their long-term debt should be insignificant. For me, that’s less than 10% of the market cap. In addition, it would be nice if they had more than $100 million in free cash flow to invest in the business.

So, who are these best blue chips poised for growth? Well, for starters, they’re stocks from three different sectors. Secondly, at least one of them won’t be a mega-cap and will have a market cap of less than $25 billion.

Fastenal (FAST)

I’ve been a Fastenal (NASDAQ:FAST) fan for years. Recently, I included FAST in a group of seven stocks to own in February 2021. The first time I wrote about the industrial distributor was in March 2012.

I was thumbs down on the stock suggesting it was overpriced at 25x earnings before interest, taxes, depreciation, and amortization (EBITDA). Today, its EV/EBITDA is 18.69x, less than its five-year average.

So, suppose you buy Fastenal at current prices. In that case, you’re getting shares in a company with a trailing 12-month free cash flow of $767.2 million [cash flow], total debt of $648.1 million, or 2.1% of its $30.8 billion market cap, and generating a 2.6% dividend yield.

Year-to-date, Fastenal’s stock’s up nearly 14%, 431 basis points higher than the index. So over the past five years, it’s almost doubled the index’s performance.

As businesses go, you can’t get much more blue-chip than Fastenal.

Robert Half International (RHI)

Robert Half International (NYSE:RHI) was one of the first human resource consulting firms. It started in 1948 when Bob Half looked to connect job seekers with companies with open positions.

The company got a new executive officer on May 17 when it announced Joseph Tarantino as an executive officer of Robert Half. Tarantino has been CEO of its Protiviti division since 2007. It now generates close to $2 billion in annual revenue and accounts for nearly 30% of the company’s overall revenue.

In late April, it released its first-quarter results. Revenues were $1.72 billion, 5.4% lower than Q1 2022. On the bottom line, it earned $122.0 million, 27.5% less than a year earlier. The big winner in the quarter was Protiviti, whose revenues grew 4.6% to $494.1 million.

“Protiviti led the way with its 22nd consecutive quarter of year-over-year revenue growth. Talent solutions performed well against a backdrop of client hiring caution and tight labor markets,” stated CEO Keith Waddell.

Robert Half’s trailing 12-month free cash flow is $624.6 million [key ratios]; it has no debt and a 3.0% dividend yield.

Philip Morris International (PM)

Philip Morris International (NYSE:PM) stock has underperformed in 2023, down more than 11% YTD. However, when it yields more than 5.6%, capital appreciation isn’t nearly as necessary for a successful investment.

Philip Morris CEO Jacek Olczak told the Financial Times that he sees the company becoming an ESG stock ESG stock very soon. That’s because its smokeless vape products now account for a third of the company’s revenue, and more analysts are sniffing around.

“I’m not saying that they are building a position in Philip Morris … but the asset managers will not spend the time on talking with you if they don’t have in mind that one day is coming that they should reconsider the exclusion [policy],” Olczak told FT in an interview, CNN Business reported.

The CEO argues that the world needs to push to eliminate cigarettes by making healthier alternatives — especially those made by Philip Morris — easily accessible to consumers.

While earnings were down in the first quarter — $2.0 billion compared to $2.33 billion a year earlier – they were still more than 10% of its revenue.

Get paid to wait for its next leg up.

On the date of publication, Will Ashworth did not have (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.