The year so far has been harsh for the stock market due to headwinds like surging inflation, a hawkish Fed, and the war in Ukraine. Rising concerns over a slowing economy have added to the pressure lately.
The U.S. GDP fell at a 0.9% annualized rate following a 1.6% decline during the first quarter. With the economy shrinking for the second straight quarter, the stock market swings will likely amplify. CEO of BlackRock Larry Fink cited that the stock market is not likely to completely rebound in the second half of 2022, as inflation remains high.
Considering the volatile market conditions, investing in large-cap stocks can help hedge some of the market risks. Large-cap stocks are often considered safer and profitable opportunities for investors due to their stability amid market disruptions. The broad market reach, strong pricing power, and high liquidity help these companies survive economic troubles and generate stable cash flows.
Given this backdrop, fundamentally sound large-cap stocks AbbVie Inc. (ABBV), Broadcom Inc. (AVGO), Bristol-Myers Squibb Company (BMY), Cigna Corporation (CI), and BHP Group Limited (BHP) could be solid additions to one’s portfolio.
AbbVie Inc. (ABBV)
With a market capitalization of $267.10 billion, ABBV is engaged in developing, manufacturing, and selling pharmaceuticals globally. It offers its products in various categories: immunology, oncology, neuroscience, eye care, and women's healthcare. The company markets its products to wholesalers, distributors, government agencies, health care facilities, and independent retailers.
On July 20, 2022, ABBV announced a strategic alliance with iSTAR Medical SA to develop and commercialize iSTAR's MINIject device for the treatment of glaucoma. This partnership is expected to expand ABBV’s diverse eye care portfolio and provide additional treatment options for glaucoma patients.
On July 26, 2022, the European Commission approved the company’s RINVOQ (upadacitinib) for treating adults with moderate to severe ulcerative colitis who have had an inadequate response and lost response or were intolerant to either conventional therapy or a biologic agent. This approval should strengthen ABBV’s ability to treat patients with ulcerative colitis.
ABBV’s net revenues increased 4.1% year-over-year to $13.54 billion in the first quarter ended March 31, 2022. The company’s non-GAAP net earnings increased 9.3% from the year-ago value to $5.64 billion, while its operating earnings grew 15% year-over-year to $4.72 billion. ABBV’s adjusted EPS rose 9.3% from the prior-year quarter to $3.16.
Analysts expect ABBV’s EPS and revenue to increase 6.4% and 4.8% year-over-year to $3.31 and $14.64 billion, respectively, in the fiscal second quarter ended June 30, 2022. ABBV has gained 39.4% over the past nine months and 28.1% over the past year to close the last trading session at $151.15.
ABBV’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has an A grade for Quality and a B for Growth and Value. Also, it is ranked #10 of 171 stocks in the Medical - Pharmaceuticals industry. To see additional POWR Ratings for Momentum, Stability, and Sentiment for ABBV, click here.
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies a range of semiconductor devices focusing on complex and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. It operates through two segments: semiconductor solutions and infrastructure software. The company has a market capitalization of $213.74 billion.
On May 26, 2022, AVGO announced the acquisition of VMware, Inc. (VMW) for approximately $61 billion in cash and stock. This acquisition should accelerate software scale, growth opportunities for the company, and fuel revenues.
For the second quarter ended May 1, 2022, AVGO’s net revenue increased 23% year-over-year to $8.10 billion. Its adjusted EBITDA rose 29.1% year-over-year to $5.11 billion, while its non-GAAP net income came in at $4 billion, up 34.2% from its year-ago period. AVGO’s non-GAAP EPS stood at $9.07, indicating a 37% year-over-year increase.
For the fiscal third quarter (ending July 2022), AVGO’s revenue is expected to increase 24% year-over-year to $8.41 billion. Street expects its EPS to increase 37.3% year-over-year to $9.55 in the current quarter. The company surpassed the EPS estimates in each of the trailing four quarters.
Shares of AVGO have gained 11% over the past year to close the last trading session at $527.79.
AVGO has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and Quality and a B for Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #7 out of 94 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see AVGO’s ratings for Value, Momentum, and Stability here.
Bristol-Myers Squibb Company (BMY)
With a market capitalization of $159.28 billion, BMY is a biopharmaceutical company offering pharmaceutical products for treating hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.
On July 22, 2022, the company received CHMP’s approval for the LAG-3-blocking antibody combination Opdualag (nivolumab and relatlimab) for treating unresectable or metastatic melanoma patients. With this approval, nivolumab and relatlimab diversifies BMY’s portfolio and reinforce its leadership in delivering innovative melanoma treatments.
For the second quarter ended June 30, 2022, BMY’s total revenues increased marginally year-over-year to $11.89 billion. Its non-GAAP EBIT grew 12.4% year-over-year to $5 billion, while its non-GAAP net earnings rose 13.2% from the year-ago value to $4.15 billion. The company’s non-GAAP EPS increased 18.4% from its prior-year quarter to $1.93.
Analysts expect BMY’s EPS and revenue to increase 7% and 3.6% year-over-year to $8 and $47.80 billion in fiscal 2023 (ending December 31, 2023). BMY surpassed the consensus EPS estimates in each of the trailing four quarters.
The shares of BMY have gained 32.4% over the past nine months and 20% year-to-date. It closed the last trading day at $74.81.
BMY’s POWR Ratings reflect solid prospects. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It also has an A grade for Value and a B for Growth and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #4 of 171 stocks. To see the additional POWR Ratings of BMY for Momentum, Stability, and Sentiment, click here.
Cigna Corporation (CI)
CI is an insurance service provider operating through two segments: Evernorth; and Cigna Healthcare. The company offers a range of coordinated and point solution health services and intelligence solutions through its Evernorth segment.
On the other hand, its Cigna Healthcare segment provides products and services, including medical, pharmacy, behavioral health, dental, vision, and health advocacy programs for insured and self-insured customers. It has a market capitalization of $87.16 billion.
On May 5, 2022, CI launched Provider consult services powered by Evernorth to drive better outcomes for cancer patients. Such service is expected to enhance the company’s suite of integrated oncology solutions, which drives better health outcomes at lower costs for patients.
On June 16, 2022, the company’s Board of Directors announced a repurchase of $3.5 billion of common stock through accelerated stock repurchase agreements. This agreement is expected to return significant value to its shareholders and generate strong cash flow.
For the fiscal first quarter (ended March 31, 2022), CI’s total revenues increased 7.4% year-over-year to $44.01 billion. Its adjusted income from operations increased 16% from the year-ago value to $1.93 billion, while its net income grew marginally year-over-year to $1.18 billion. The company’s net income per share came in at $3.68, representing an 11.5% year-over-year improvement.
Analysts expect CI’s EPS and revenue to increase 5.2% and 2.9% year-over-year to $5.51 and $44.34 billion, respectively, in the fiscal second quarter (ended June 30, 2022). It has gained 28.7% over the past nine months to close the last trading session at $274.73.
CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy.
CI has a B grade for Growth, Value, Sentiment, and Quality. The stock is ranked #6 out of 11 in the A-rated Medical - Health Insurance industry. Click here to see CI’s rating for Momentum and Stability.
BHP Group Limited (BHP)
Headquartered in Melbourne, Australia, BHP operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. It operates through Petroleum, Copper, Iron Ore, and Coal segments. BHP has a market capitalization of $190.91 billion.
On June 1, 2022, BHP CEO Mike Henry said, “The merger of our petroleum assets with Woodside creates a leading global energy company with the scale and opportunity to help supply the energy needed for global growth and development in a rapidly decarbonizing world. Our shareholders will now have exposure to assets in two organizations, BHP and Woodside, each with a very clear focus, strategy, and value proposition.”
For the half year ended December 31, 2021, BHP’s revenues increased 27% to $30.53 billion. Its operating profit increased 50.1% year-over-year to $14.85 billion. Its EPS came in at $186.20, up 143.4% year-over-year. Also, its profit after tax from continuing and discontinued operations came in at $10.51 billion, up 117.6% year-over-year.
For fiscal 2022, BHP’s revenue is expected to increase 7.9% year-over-year to $65.60 billion. Over the past month, the stock has declined 7.3% to close the last trading session at $53.44.
BHP’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has a B grade for Stability and Quality. Within the Industrial - Metals industry, it is ranked #4 out of 36 stocks. To see the other ratings of BHP for Growth, Value, Momentum, and Sentiment, click here.
ABBV shares were trading at $149.87 per share on Thursday afternoon, down $1.28 (-0.85%). Year-to-date, ABBV has gained 13.84%, versus a -14.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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