My friends all know that I’m not a new car buyer. I can’t rationalize the instant depreciation signing new car paperwork creates. It would probably keep me up at night. Recently, a client came to me dead set on buying a new Lexus ES. Then she asked my opinion. She wasn’t pleased with my answer, which ended with me saying “… a complete waste of money you and I have worked so hard together to preserve and grow.” It was clear she had made up her mind on a new car. So I suggested and alternative: why not by a brand new Toyota Avalon? It’s the same car.

#-ad_banner-#Everyone knows that Lexus is the luxury brand of Toyota Motor Corp. (NYSE: TM). And, like their American counterparts, Toyota builds its brands on the same basic platform. A 2016 Lexus ES 350, built on the Avalon platform, has a base price of around $39,000. The Toyota Avalon has a base price of around $33,000. An 18% premium for basically the same automobile. Not a good way to deploy money. I’m also seeing similar behavior as equity markets grind higher.

As markets hiccupped recently with the Brexit crisis, cautious investors who wanted to own stocks gravitated to more defensive sectors such as utility and consumer staples stocks. The companies have steady, all-weather businesses and pay regular dividends. Naturally, the “flight to quality” bid these names up significantly.

On average, the SPDR Utilities ETF (NYSE: XLU) and the SPDR Consumer Staples ETF (NYSE: XLP) have risen an average of 10% in just three months versus an 8.7% gain for the S&P 500 Index; an outperformance of nearly 15%.

When sectors get popular, valuations get stretched. Investors chasing those perceived defensive sectors are now probably paying too much. 

However, there are still some decently priced, blue chip quality stocks out there with decent dividend yields. Plus, their businesses have a defensive bias.

Dow Chemical Co. (NYSE: DOW) — The largest chemical company in the United States, household name Dow provides chemical, plastic and agricultural products to many consumer markets. While historically the chemical business has been cyclical, Dow has been shifting the focus of its product portfolio to specialty chemicals and plastics that are less cyclical, as well as expanding its agribusiness division. Specialty products now account for 60% of the company’s revenue and agribusiness has room to grow at just 13%. 

Achieving this goal required selling assets deemed non-core by management. The largest transaction involved the sale of Dow’s chlorine based business to Olin Corp. (NYSE: OLN) which generated $2 billion in cash and $2.2 billion in Olin stock, with the result that Dow shareholders now own 50.5% of Olin. 

But the biggest synergy event is yet to come. Dow has agreed to merge with fellow chemical giant DuPont (NYSE: DD) to create an even larger specialty chemical and agribusiness leviathan. The combination is expected to create $3 billion in cost synergies and over $1 billion in revenue growth synergies. Dow shares trade near $51, a 10.6% discount to their 52-week high, with a forward P/E of 14.5 and a 3.7% dividend yield.

International Paper Co. (NYSE: IP) — When you’re the largest paper and forest products company in the world, your market share numbers are pretty staggering. Currently, IP produces about 20% of the world’s free sheet paper used in copiers, desktop and laser printers as well as in digital imaging. However, as that market continues to shrink thanks to the proliferation of email and electronic messaging, IP has successfully shifted its focus to where the real money is: packaging. The company currently controls 25% of the global coated paperboard market.

Granted, stocks of papermakers are considered cyclical. However, the dynamics of the growing global middle class and IP’s enormous scale turn this stock into a steady, long-term growth story with a value priced stock. IP shares trade at an 11% discount to their 52-week high at around $44 with a forward P/E of 12.7 and an attractive 4.1% dividend yield.

HP, Inc. (NYSE: HPQ) — Honestly, I hadn’t seriously looked at this stock since the mid 90’s. The company has made just too many stupid moves from bad management hires to not shifting product focus soon enough. But with the spinoff of the enterprise computing business (NYSE: HPE), HP has emerged as a much more focused entity charged with the goal of returning capital to shareholders. While the HPQ’s core printing business is, indeed a long shrinking proposition, the supplies portion of the business is the most intriguing.

Comprised mostly of consumable items such as ink and cartridges, supplies generated 26.5% of the company’s 2015 revenue of $53.3 billion. What’s more, this division generated operating margins of 17% versus the hardware division’s measly operating margins of just 3.5%. The supply business is viewed by analysts as almost annuity like in that it’s a steady, predictable, long term stream of income. 

The result of the strength of this business line and the separation from the enterprise (i.e. cloud) business should result in the company generating free cash flow between $2.3 billion and $2.6 billion for 2016 which would help fulfill management’s vision of capital return. The stock looks incredibly cheap at $13.81 with a forward P/E of just 8.5 and a dividend yield of 3.8%.

Risks To Consider: While these stocks can be viewed as an alternative to the perceived “safety” of expensive looking consumer staples stocks, they are not officially in that sector. However, all three have strong franchises, consistent operating histories, and positive macro trends to benefit from. Also, there is the risk of the unknown with the success of the Dow/DuPont merger.

Action To Take: These three blue chip stocks are a value-priced opportunity for investors who feel they may have missed the run up in more defensive stocks. The alternative that these stocks offer is a greater opportunity for growth. As a basket, these stocks have a blended forward P/E of 11.9 and a combined dividend yield of 3.8%. A P/E expansion to 14 combined (very reasonable) with the dividend would result in a total return in excess of 20%, which offers a better opportunity than consumer staples or utilities.

Editor’s Note: Looking to play defense in your portfolio? We’ve identified the top “Crash-Protection” stock to buy now. It’s been around since the 1800s… and thrives during bad times. During the 2007 to 2009 recession, it had record profits. In fact, every time investors panic, this company increases its profits. Get the name of this stock here.

Disclosure: Adam Fischbaum owns IP in managed client portfolios.