The equity market’s volatility has surged in recent weeks amid concerns over an economic slowdown due to tighter monetary policy from the Federal Reserve to control rising inflationary pressure. Beyond this, escalating geopolitical tensions and the current COVID-19 resurgence in China are compounding investors' worries. Yesterday, the Commerce Department reported that the U.S. GDP declined 1.4% in the first quarter, missing analysts’ expectation of a 1% gain.
Since the market’s volatility is not expected to ease anytime soon, the adage 'Sell in May and Go Away' could become real in the coming month. But we think investors could consider betting on stocks that have the potential to generate substantial returns.
If 'Sell in May and Go Away' becomes manifest, it could be wise to bet on fundamentally sound stocks BHP Group Limited (BHP), Cigna Corporation (CI), and AutoNation, Inc. (AN) on their price dips. These stocks are rated Strong Buy in our proprietary POWR Ratings system.
BHP Group Limited (BHP)
Headquartered in Melbourne, Australia, BHP is a resources company internationally, and Petroleum, Copper, Iron Ore, and Coal are its four operational segments. The company explores, develops, and produces oil and gas properties and mines copper, silver, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and energy coal.
For the half-year ended December 31, 2021, BHP's revenue increased 26.9% year-over-year to $30.53 billion. Its profit from operations grew 50.1% from its year-ago value to $14.85 billion, while its underlying attributable profit amounted to $10.7 billion, up 77% from its prior period. Its EPS increased 143.4% from its previous period to $186.2.
Analysts expect BHP's revenue to increase 10.5% year-over-year to $67.18 billion for its fiscal year 2022. The stock has gained 12.9% in price year-to-date and 21.4% over the past six months.
BHP's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has an A grade for Quality and a B for Sentiment. Within the Industrial - Metals industry, it is ranked #1 of 37 stocks.
To see additional POWR Ratings for Growth, Value Stability, and Momentum for BHP, click here.
Click here to check out our Industrial Sector Report for 2022
Cigna Corporation (CI)
CI delivers insurance and related products and services in the United States. Its Evernorth segment provides a range of coordinated and point solution health services, including pharmacy, benefits management, care delivery and management, and intelligence solutions to health plans, employers, government organizations, and healthcare providers. CI is headquartered in Bloomfield, Conn.
During the fourth quarter, ending Dec.31, 2021, CI's adjusted revenues increased 9.6% year-over-year to $45.68 billion. Its adjusted income from operations grew 24.1% from its year-ago value to $1.57 billion, while its shareholder's net income amounted to $1.12 billion. The company's EPS came in at $3.39 over the period.
The $5.18 consensus EPS estimate for the first quarter ending March 31, 2022, represents 9.5% year-over-year growth. Analysts expect revenue to increase 6.1% year-over-year to $43.48 billion for the fourth quarter ending March 31, 2022. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters. The company's shares have surged 10.7% in price year-to-date and 17.8% over the past six months.
CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Value and Stability. In the B-rated Medical - Health Insurance industry, it is ranked #2 of 10 stocks.
In total, we rate CI on eight distinct levels. Beyond what we have stated above, we have also given CI grades for Growth, Sentiment, Quality, and Momentum. Get all the CI ratings here.
AutoNation, Inc. (AN)
AN functions as an automotive retailer in the United States through its subsidiaries. The Fort Lauderdale, Fla,-based company operates through three segments: Domestic, Import, and Premium Luxury. It offers a range of automotive products and services, including new and used vehicles, parts, and services, such as automotive repair and maintenance and wholesale parts and collision services.
AN's revenues increased 14% year-over-year to $6.75 Billion for the first quarter, ending March 31, 2022. Its operating income grew 54% from its year-ago value to $519 million, while its adjusted net income improved 55% from its prior-year quarter to $362.1 million. The company's adjusted EPS rose 107% year-over-year to $5.78.
Analysts expect AN's revenue to increase 10.2% year-over-year to $7.03 million in the third quarter, ending Sept. 30, 2022. The $6.11consensus EPS estimate for the second quarter, ending June 30, 2022, represents a 26.5% improvement year-over-year. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has soared 13.2% in price over the past year and 7.7% over the past three months.
It is no surprise that AN has an overall A rating, which equates to Strong Buy in our POWR Ratings system. AN also has an A grade for Value and a B grade for Quality and Growth. Within the B-rated Auto Dealers & Rentals industry, it is ranked #3 of 24 stocks.
Click here to see the additional POWR Ratings for AN (Momentum, Stability, and Sentiment)
BHP shares were trading at $68.93 per share on Friday morning, up $0.82 (+1.20%). Year-to-date, BHP has gained 19.43%, versus a -10.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 Stocks to Buy as Investors 'Sell in May and Go Away' StockNews.com
