This year has been challenging for the stock market, primarily due to the multi-year high inflation and the interest rate hikes imposed by the Fed to tackle it. The Fed’s six rate hikes to curb the stubbornly high inflation have triggered broad market sell-offs this year.
However, the central bank’s aggressive stance looks to be paying off as inflation eased in October, with the consumer price index (CPI) rising 7.7% year-over-year and 0.4% sequentially, below analyst estimates. Fed Chairman Jerome Powell recently indicated that the Fed might implement a 50-basis-point rate hike this month.
A slower pace of interest rate hikes is expected to bring relief to the economy. Many analysts now believe the economy could face only a mild recession next year.
Given this backdrop, it could be wise to add fundamentally strong stocks Cigna Corporation (CI), Schlumberger Limited (SLB), and Myers Industries, Inc. (MYE).
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.
On September 15, 2022, CI’s Evernorth segment announced that it had expanded its Digital Health Formulary to include five new app-based programs to help people better manage their sleep issues, anxiety, alcohol and opioid use disorders, and inflammatory conditions. The expansion is expected to be beneficial for the company.
For the fiscal third quarter (ended September 30, 2022), CI’s total revenues increased 2.2% year-over-year to $45.28 billion. Its shareholders’ net income grew 70.1% year-over-year to $2.76 billion. The company’s adjusted income from operations per share came in at $6.04, representing a 5.4% year-over-year improvement.
Analysts expect CI’s EPS and revenue to increase marginally year-over-year to $4.86 and $45. 79 billion, respectively, in the fiscal fourth quarter (ending December 31, 2022). The company has surpassed the consensus EPS estimates in each of the trailing four quarters.
It has gained 59.6% over the past year and 43.5% year-to-date to close the last trading session at $329.64.
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. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
CI has a B grade for Value, Sentiment, and Quality. The stock is ranked #5 of 11 in the A-rated Medical - Health Insurance industry. Click here to see CI’s Growth, Momentum, and Stability rating.
Schlumberger Limited (SLB)
SLB supplies reservoir characterization, drilling, production, and processing technology to the energy industry worldwide. It operates in four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.
On October 26, 2022, SLB announced the acquisition of Gyrodata Incorporated. Jesus Lamas, President of Well Construction, SLB, said, “The integration of Gyrodata’s innovative sensors and proprietary technologies within SLB’s drilling and logging suites will result in the most accurate and highly optimized well placement services in the industry. This will transform drilling technology designs while advancing SLB’s autonomous, self-steering capabilities.”
For the third quarter that ended September 30, 2022, SLB’s revenue increased 27.9% year-over-year to $7.48 billion. The company’s net income grew 64.9% from its year-ago value to $907 million, while its EPS rose 61.5% year-over-year to $0.63. Also, its adjusted EBITDA increased 35.5% from the prior-year value to $1.76 billion.
For the fourth quarter ending December 31, 2022, SLB’s revenue represents a 25.4% increase from the same period last year to $7.81 billion. Its EPS for the current quarter is expected to increase 65.3% year-over-year to $0.68. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 69.5% to close the last trading session at $50.88.
SLB’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. It has an A grade for Momentum and Sentiment and a B for Quality. Out of 42 stocks in the B-rated Energy - Services industry, it is ranked #15.
In addition to the POWR Ratings I’ve just highlighted, you can see SLB’s Growth, Value, and Stability ratings here.
Myers Industries, Inc. (MYE)
MYE is a leading manufacturer of a wide range of polymer and metal products for industrial, agricultural, automotive, commercial, and consumer markets. It is engaged in the distribution of tire service supplies in Ohio. The company operates through two segments: Material Handling and Distribution.
On June 1, 2022, MYE acquired Mohawk Rubber Sales of New England Inc., a leading auto aftermarket distributor with a long-standing reputation for quality and service. This acquisition strengthens MYE’s distribution segment and brings accretive opportunities to expand and grow.
On October 17, 2022, the company introduced a broad portfolio of reusable packaging solutions at Pack Expo 2022. The new set of solutions is expected to be highly demanded by various industries such as industrial manufacturing, food processing, retail/wholesale distribution, agriculture, and automotive, thereby boosting revenues.
MYE’s net sales increased 14% year-over-year to $228.06 million for the third quarter that ended September 30, 2022. Its adjusted operating income increased 75.7% year-over-year to $22.01 million, while its adjusted net income grew 76.9% from the prior-year value to $15.02 million. The company’s adjusted EPS came in at $0.41, representing a 78.3% year-over-year increase. In addition, its adjusted EBITDA increased 57.2% year-over-year to $27.17 million.
Analysts expect MYE’s revenue and EPS for the fourth quarter ending December 31, 2022, to increase 10.6% and 26.1% year-over-year to $220.63 million and $0.29, respectively. The company has surpassed the consensus EPS estimates in each of its trailing four quarters.
The stock has gained 39.5% over the past nine months and 15.7% year-to-date to close the last trading session at $23.15.
MYE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Stability, and Quality. Within the A-rated Industrial - Manufacturing industry, it is ranked #3 out of 36 stocks. To see the other ratings of MYE for Value, Momentum, and Sentiment, click here.
CI shares were trading at $332.28 per share on Wednesday afternoon, up $2.64 (+0.80%). Year-to-date, CI has gained 47.09%, versus a -16.22% 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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