5 Blue-Chip Stocks Outperforming the Market in 2022
The stock market closed in the red yesterday as concerns about inflation again spooked investors. Blue-chip stocks are known for their rich history of sustained gains. Hence, we think blue-chip...
The stock market closed in the red yesterday as concerns about inflation again spooked investors. Blue-chip stocks are known for their rich history of sustained gains. Hence, we think blue-chip names Walmart (WMT), AbbVie (ABBV), Cigna Corp (CI), International Business Machines (IBM), and Johnson & Johnson (JNJ), whose stocks have outperformed the broader market this year, might be ideal bets to navigate a volatile market. Let’s discuss.
The stock market has been on a rollercoaster ride this year. The Dow has declined nearly 2%, while the Nasdaq Composite has retreated approximately 4.3%. The S&P 500 declined 3.2%, to below the 4,000 mark for the first time in over a year, as investors anticipated further bad news about U.S. inflation.
The stock market is facing heightened volatility on concerns about the prospects of the global economy amid sky-high inflation, rising interest rates, and supply chain issues. Stocks are approaching a bear market, with the S&P now 16.8% below its January 3 record through Monday. So, well-known companies with a history of sustained success and large market capitalizations, also known as blue-chip companies, might be good bets to navigate a volatile market.
We think the stocks of fundamentally strong blue-chip companies Walmart Inc. (WMT), AbbVie Inc. (ABBV), Cigna Corporation (CI), International Business Machines Corporation (IBM), and Johnson & Johnson (JNJ) would be solid bets now. These stocks have vastly outperformed the S&P 500’s 16.3% decline year-to-date.
Walmart Inc. (WMT)
WMT in Bentonville, Ark., is a retail industry giant that engages in global retail, wholesale, and other unit businesses. The company operates through the three broad segments of Walmart U.S.; Walmart International; and Sam’s Club.
On April 27, it was reported that WMT’s Walmart+ members would enjoy fuel savings of up to 10 cents per gallon at an expanded lineup of stations, which includes Exxon Mobil Corporation (XOM) stations. This benefit of an expanded fuel footprint might bolster WMT’s customer base.
On April 22, WMT’s opening of a $220 million Import Distribution Center in Ridgeville, S.C. , was reported. This development might benefit the company by expanding its operative capacity.
WMT’s total revenues increased 0.5% year-over-year to $152.87 billion in its fiscal fourth quarter, ended January 31. Its operating income improved 7.3% from the same period last year to $5.89 billion. And its adjusted EPS rose 10.1% from the prior-year quarter to $1.53.
The Street’s $6.77 EPS estimate for its fiscal year 2023 indicates a 4.8% year-over-year increase. Likewise, the Street’s $591.21 billion revenue estimate for the same year reflects a 3.2% rise from the same period in the prior year. Furthermore, WMT has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.
WMT’s stock has gained 7.9% in price over the past year to close yesterday’s trading session at $151.31. It has gained 4.6% year-to-date.
WMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
WMT has a Growth, Stability, Sentiment, and Quality grade of B. In the 38-stock Grocery/Big Box Retailers industry, it is ranked #7. The industry is rated A. Click here to see the additional POWR Ratings for WMT (Value and Momentum).
AbbVie Inc. (ABBV)
ABBV engages in the discovery, development, manufacture, and sale of pharmaceuticals worldwide. The North Chicago, Ill.-based company’s offerings include pharmaceutical products that include autoimmune and intestinal disease therapy, HUMIRA, adult plaque psoriasis treatment SKYRIZI, and adult rheumatoid arthritis treatment RINVOQ.
On April 29, ABBV announced that the United States Food and Drug Administration (FDA) had approved RINVOQ (upadacitinib; 15 mg, once daily) for the treatment of adults with active ankylosing spondylitis (AS). Thomas Hudson, M.D., senior vice president, research and development, chief scientific officer, ABBV, said, "This latest approval demonstrates another important step forward in our mission to advance the standards of care in rheumatic diseases."
On April 28, it was announced that premier, next-generation Targeted Protein Degradation (TPD) company Plexium, Inc., and ABBV had entered an exclusive strategic collaboration to develop novel TPD therapeutics for neurological conditions. This collaboration might deliver benefits to the company.
ABBV’s net revenues increased 4.1% year-over-year to $13.54 billion in its fiscal first quarter. ended March 31, 2022. Its adjusted earnings after tax improved 9.3% from the prior-year period to $5.64 billion, while its adjusted EPS came in at $3.16, up 9.3% from the prior-year quarter.
The $3.43 consensus EPS estimate for the quarter ending June 30, 2022, indicates a 10.3% year-over-year increase. And the $14.62 billion consensus revenue estimate for the same quarter reflects a 7.2% improvement from the prior-year quarter. Furthermore, ABBV has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
Over the past year, the stock has gained 30.4% in price to close yesterday’s trading session at $150.96. It has gained 11.5% year-to-date.
It is no surprise that ABBV has an overall A rating, which translates to Strong Buy in our POWR Rating system. The stock has an A grade for Quality and a B grade for Growth. In the 164-stock Medical – Pharmaceuticals industry, it is ranked #4.
In addition to the POWR Rating grades we have stated above, one can see ABBV ratings for Value, Momentum, Stability, and Sentiment here.
Cigna Corporation (CI)
CI in Bloomfield, Conn., operates as an insurance and related products and services provider in the U.S. The company offers a range of coordinated and point solution health services through its Evernorth segment, and its Cigna Healthcare segment provides medical and health advocacy programs.
On May 5, CI introduced a new service to improve health outcomes for cancer patients, powered by Evernorth. The service connects patients and their community oncologists with cancer subspecialty experts at National Cancer Institute (NCI) designated centers. The company might benefit from this move by driving better health outcomes for cancer patients.
On April 27, CI declared a $1.12 per share dividend on its common stock, payable to shareholders on June 23. This reflects the company’s ability to pay back its shareholders.
For its fiscal first quarter ended March 31, 2022, CI’s adjusted revenues increased 7.6% year-over-year to $44.11 billion. Its adjusted income from operations rose 16% from the prior-year quarter to $1.93 billion. Its adjusted income from operations per share improved 27.1% from the same period the prior year to $6.01.
The Street’s $5.75 EPS estimate for the quarter ending June 30, 2022, reflects a 9.7% year-over-year improvement. Likewise, the Street’s $44.57 billion revenue estimate for the same quarter indicates a rise of 3.4% from the prior-year period. In addition, CI has beaten consensus EPS estimates in each of the trailing four quarters.
The stock has gained 13.8% in price year-to-date and 12.5% over the past three months to close yesterday’s trading session at $261.41.
This promising prospect is reflected in CI’s POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
CI has a Growth, Value, Stability, and Sentiment grade of B. In the 10-stock Medical – Health Insurance industry, it is ranked #4. The industry is rated B. Click here to see the additional POWR Ratings for CI (Momentum and Quality).
International Business Machines Corporation (IBM)
IBM is a technology company that operates as a global integrated solutions and services provider. The Armonk, N.Y. company functions through the four broad business segments of Software; Consulting, Infrastructure; and Financing.
On April 26, IBM announced an increase in its regular quarterly dividend to $1.65 per common share, payable to shareholders on June 10. This marks the 27th year in a row that IBM has increased its dividend, which reflects the company’s ability in cash generation.
On April 25, IBM subsidiary The Weather Company introduced Max Velocity and Max Alert Live, the latest innovations to its Max platform. The innovations are expected to address the media industry’s evolving needs and help provide viewers with severe weather notifications quickly.
For its fiscal first quarter, ended March 31, 2022, IBM’s total revenue increased 7.7% year-over-year to $14.20 billion. Its non-GAAP gross profit rose 4.4% from the prior-year quarter to $7.52 billion. Its non-GAAP income from continuing operations and non-GAAP EPS improved 25.5% and 25%, respectively, from the same period last year to $1.27 billion and $1.40.
The $9.69 consensus EPS estimate for its fiscal year 2022 indicates a 22.2% year-over-year increase. And the $60.99 billion consensus revenue estimate for the same year reflects a 6.4% rise from the prior year. IBM has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 11.2% in price over the past six months and 5.3% over the past month to close yesterday’s trading session at $134.44. It has gained 0.6% year-to-date.
IBM has an overall B rating, which translates to Buy in our POWR Rating system. The stock has a Value and Quality grade of B. In the 81-stock Technology – Services industry, it is ranked #23.
Click here to see the additional POWR Ratings for IBM (Growth, Momentum, Stability, and Sentiment).
Johnson & Johnson (JNJ)
JNJ engages in the global research, development, manufacture, and sale of various healthcare products. The New Brunswick, N.J., company operates through the three broad segments of Consumer Health; Pharmaceutical; and Medical Devices.
On April 25, JNJ announced the launch of the J&J Satellite Center for Global Health Discovery at its Holistic Drug Discovery and Development Centre, University of Cape Town, in Cape Town, South Africa. The center’s establishment is expected to bolster the company’s global scientific network.
On April 19, JNJ declared a $1.13 per share quarterly dividend, which marked a 6.6% increase from its $1.06 per share prior dividend. The dividend is payable on June 7 and aggregates to $4.52 per share annually. This reflects on JNJ’s ability to shareholder return.
JNJ’s reported sales increased 5% year-over-year to $23.43 billion in its fiscal first quarter of 2022. Its adjusted net earnings and adjusted EPS came in at $7.13 billion and $2.67, respectively, registering a rise of 3% and 3.1% from the same period the prior year.
Analysts expect JNJ’s EPS to increase 2.8% year-over-year to $2.55 for the quarter ending June 30, 2022. The Street expects revenue for the same quarter to improve 2.3% from the prior-year quarter to $23.85 billion. JNJ has topped consensus EPS estimates in each of the trailing four quarters.
JNJ’s shares have risen 9.1% in price over the past six months and 3.7% year-to-date to close yesterday’s trading session at $177.33.
JNJ has an overall B rating, which equates to Buy in our proprietary rating system. The stock has an A grade for Stability and a B grade for Quality. It is ranked #12 in the Medical – Pharmaceuticals industry.
In addition to the POWR Rating grades we have stated above, one can see JNJ ratings for Growth, Value, Momentum, and Sentiment here.
WMT shares were trading at $150.13 per share on Tuesday morning, down $1.18 (-0.78%). Year-to-date, WMT has gained 4.54%, versus a -14.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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