This year, the stock market has experienced wild swings on concerns over the Fed’s interest rate hikes to curb the inflationary pressures and declining economic growth. However, the benchmark indexes recovered significantly since July, with several data releases showing the economy’s resilience.
While the decline in the consumer price index in July from the multi-decade high level raises hopes for cooling inflation and a less aggressive Fed, a red-hot job market might prompt the Fed to maintain its hawkish stance to control the still elevated inflation. Therefore, many analysts expect the market to remain volatile.
Amid a volatile market backdrop, investing in blue-chip stocks could help you generate stable returns. Blue-chip stocks represent businesses with consistent earnings and cash flows. The wide market reach, superior pricing power, and high liquidity of these companies help their stocks stay resilient amid market fluctuations.
Blue-chip stocks AbbVie Inc. (ABBV), Abbott Laboratories (ABT), and Cigna Corporation (CI) are well-positioned to cushion your portfolio with stable returns. So, these stocks could be solid investments now.
AbbVie Inc. (ABBV)
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 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 4.5% year-over-year to $14.58 billion in the second quarter ended June 30, 2022. The company’s non-GAAP net earnings increased 10.7% from the year-ago value to $6 billion, while its adjusted EPS rose 11.2% from the prior-year quarter to $3.37.
Analysts expect ABBV’s EPS and revenue to increase 8.1% and 4.5% year-over-year to $3.60 and $14.99 billion, respectively, in the third quarter ending September 30, 2022. It has surpassed Street EPS estimates in each of the trailing four quarters. ABBV has gained 22.1% over the past year to close the last trading session at $142.29.
ABBV’s strong fundamentals are reflected in its POWR Ratings. 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 #8 of 171 stocks in the Medical - Pharmaceuticals industry. To see the additional POWR Ratings of ABBV for Momentum, Stability, and Sentiment, click here.
Abbott Laboratories (ABT)
ABT is engaged in discovering, developing, manufacturing, and selling a diversified line of health care products. The company operates through four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.
On July 12, 2022, the U.S. Food and Drug Administration (FDA) granted Breakthrough Device Designation to explore the use of ABT’s deep brain stimulation (DBS) system, personalized, adjustable therapy that implants thin wires into targeted areas of the brain, in treatment-resistant depression (TRD), a form of major depressive disorder (MDD). With this approval, ABT’s DBS system could become an effective treatment option for TRD patients.
For the second quarter ended June 30, 2022, ABT’s net sales increased 10.1% year-over-year to $11.25 billion. The company’s operating earnings grew 70.6% from the prior-year period to $2.38 billion. Also, its adjusted net earnings increased 20.2% year-over-year to $2.54 billion, while its adjusted EPS rose 22.2% from the prior-year value to $1.43.
The company’s EPS is expected to grow 11% per annum over the next five years. It surpassed Street EPS estimates in each of the trailing four quarters, which is excellent. Over the past month, the stock has gained 2.8% to close the last trading session at $111.90.
ABT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. It is ranked #2 of 145 stocks in the Medical - Devices & Equipment industry. Click here to see the other ratings of ABT for Growth, Value, and Momentum.
Cigna Corporation (CI)
CI is an insurance service provider operating through Evernorth and Cigna Healthcare segments. 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.
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.
On July 1, 2022, CI announced that it had completed the divestiture of its life, accident, and supplemental benefits businesses in six markets across the Asia Pacific to Chubb Ltd. (CB) in approximately $5.40 billion transaction. “The completion of this transaction allows us to focus further our efforts to grow our global health portfolio,” said David M. Cordani, chairman and CEO of CI.
In the fiscal second quarter (ended June 30, 2022), CI’s total revenues increased 5.4% year-over-year to $45.48 billion. Its adjusted income from operations increased 9.6% from the year-ago value to $1.98 billion. The company’s adjusted income from operations per share came in at $6.22, representing an 18.7% year-over-year improvement. Also, its adjusted EBITDA rose 8.6% from the prior-year value to $3.12 billion.
Analysts expect CI’s EPS to increase 6.9% year-over-year to $5.10 in the fiscal fourth quarter (ending December 31, 2022). Its revenue for the current quarter ending September 30, 2022, is expected to come in at $44.71 billion, representing a marginal increase year-over-year. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 38.1% over the past year to close the last trading session at $290.87.
CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
CI has a B grade for Growth, Value, and Quality. The stock is ranked #5 of 11 in the A-rated Medical - Health Insurance industry. Click here to see CI’s ratings for Momentum, Stability, and Sentiment.
ABBV shares were trading at $143.59 per share on Tuesday morning, up $1.30 (+0.91%). Year-to-date, ABBV has gained 9.07%, versus a -9.10% 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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