During periods of market uncertainty, blue-chip stocks stand out for their stability, value, and diversification. They shield investments from downturns while showcasing strong market leadership and resilience. Offering consistent growth, reliable dividends, and steady earnings, blue-chip stocks are a prudent choice for investors seeking security and performance.
Given this backdrop, investors might consider buying fundamentally strong blue-chip stocks Lockheed Martin Corporation (LMT), Regeneron Pharmaceuticals, Inc. (REGN), and The Cigna Group (CI) with strong buy ratings in our proprietary POWR Ratings system.
The U.S. economy is experiencing moderate growth despite global uncertainties and currency fluctuations. The IMF projects global growth at 3.5% this year, while a stronger dollar is impacting U.S. net exports. Moreover, inflation fell to 2.9% in July, the lowest since 2021, though core inflation rose to 3.2%.
Furthermore, the expected Fed rate cut in September may boost investment. Despite market volatility and recession concerns driven by weak job data and rising unemployment at 4.3%, the overall economic outlook remains cautiously optimistic. This makes blue-chip stocks a solid investment option, offering stability and potential growth in uncertain times.
Considering these conducive trends, let’s analyze the fundamental aspects of the three blue-chip picks.
Lockheed Martin Corporation (LMT)
LMT is a security and aerospace company that engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. The company operates through Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space segments.
On August 13, 2024, LMT and General Dynamics announced a strategic teaming agreement to produce solid rocket motors, enhancing the resilience and security of the domestic supply chain. The initial focus will be on motors for the Guided Multiple Launch Rocket System (GMLRS), with production beginning in 2025.
On August 9, 2024, LMT delivered the first of five C-130J Super Hercules aircraft to New Zealand, enhancing its tactical airlift capabilities. This delivery marks the start of a new era for the Royal New Zealand Air Force, which will modernize its fleet with these advanced aircraft.
In terms of the trailing-12-month net income margin, LMT’s 9.48% is 53.1% higher than the 6.19% industry average. Its 21.42% trailing-12-month Return on Total Capital is 201.6% higher than the industry average of 7.10%. Also, the LMT’s 1.27x trailing-12-month asset turnover ratio is 62.8% higher than the industry average of 0.78x.
LMT’s net sales for the fiscal second quarter ended June 30, 2024, grew 8.6% year-over-year to $18.12 billion. Similarly, its aeronautics net sales increased 5.8% year-over-year to $7.28 billion. For the same quarter, the company’s non-GAAP net earnings stood at $1.70 billion, while its non-GAAP EPS came in at $7.11, representing a 5.6% increase from the previous year.
For the quarter ending September 30, 2024, LMT’s revenue is expected to increase 3.7% year-over-year to $17.51 billion. Its EPS for the quarter ending March 31, 2025, is expected to increase 4.7% year-over-year to $6.63. It surpassed consensus EPS estimates in each of the trailing four quarters. LMT’s stock has gained 31.8% over the past six months to close the last trading session at $562.34.
LMT’s POWR Ratings reflect strong prospects. It has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Momentum, Stability, Sentiment, and Quality. It is ranked first out of 70 stocks in the Air/Defense Services industry. Beyond what we stated above, we have also rated LMT for Growth and Value. Get all ratings of LMT here.
Regeneron Pharmaceuticals, Inc. (REGN)
REGN discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide. The company's products include EYLEA injection, Dupixent injection, Libtayo injection, Praluent injection, REGEN-COV for COVID-19, and Kevzara solution.
On July 3, 2024, REGN and Sanofi announced that Dupixent received the first-ever EU approval for treating uncontrolled COPD with raised blood eosinophils, marking a major advancement in COPD therapy.
On June 11, 2024, RGN and Sanofi announced FDA approval for Kevzara (sarilumab) to treat active polyarticular juvenile idiopathic arthritis (pJIA) in patients weighing 63 kg or more. This approval adds a new treatment option for pediatric patients and expands Kevzara's use in managing chronic inflammatory conditions.
In terms of the trailing-12-month levered FCF margin, REGN’s 15.50% is significantly higher than the 1.26% industry average. Likewise, its 30.14% trailing-12-month EBIT margin is considerably higher than the 2.32% industry average. Moreover, its 5.50% trailing-12-month Capex / Sales is 64% higher than the industry average of 3.35%.
During the fiscal second quarter, which ended on June 30, 2024, REGN’s revenues amounted to $3.55 billion indicating a 12.3% increase year-over-year. The company’s non-GAAP net income rose 14.3% from the year-ago value to $1.35 billion, while its non-GAAP net income per share grew 12.9% year-over-year to $11.56.
Street expects REGN’s EPS and revenue for the quarter ending September 30, 2024, to increase 1.6% and 8.7% year-over-year to $11.77 and $3.65 billion, respectively. It surpassed the Street EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 44.4%, closing the last trading session at $1,151.35.
It’s no surprise that REGN has an overall rating of A, which translates to a Strong Buy in our proprietary POWR Ratings system.
REGN has a B grade for Value, Stability, Sentiment, and Quality. Within the Biotech industry, it is ranked #7 out of 337 stocks. To access the other ratings of REGN for Growth and Momentum, click here.
The Cigna Group (CI)
CI provides insurance and related services. It operates through its Evernorth Health Services and Cigna Healthcare segments. The company also offers permanent insurance contracts for financing employer-paid benefits.
In terms of the trailing-12-month EBIT margin, CI’s 3.51% is 51.14% higher than the 2.32% industry average. Its 1.41x asset turnover ratio is 244.1% higher than the 0.41x industry average.
CI’s adjusted revenues for the second quarter ended June 30, 2024, increased 24.4% year-over-year to $60.47 billion. Its adjusted income from operations rose 4.9% and 9.6% year-over-year to $1.91 billion, or $6.72 per share. Moreover, the company’s pharmacy revenues came in at $45.10 billion, up 32.8% over the prior-year quarter.
Analysts expect CI’s revenue for the quarter ending September 30, 2024, to increase 21.4% year-over-year to $59.56 billion. Its EPS for the same quarter is expected to grow 9.4% year-over-year to $7.41. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, CI’s stock has gained 15.8% to close the last trading session at $335.16.
CI’s POWR Ratings reflect strong prospects. It has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Quality. It is ranked #2 out of 10 stocks in the A-rated Medical - Health Insurance industry. To see CI’s Momentum, Stability, and Sentiment ratings, click here.
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LMT shares were unchanged in after-hours trading Wednesday. Year-to-date, LMT has gained 26.02%, versus a 15.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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