Despite the prevalent macroeconomic turmoil, broader markets have witnessed significant gains over the past month. The S&P 500 gained 11.4% over the past month after hitting record lows in the second quarter. Moreover, amid relaxing inflation numbers, consumer sentiment is gradually improving.
The University of Michigan’s August reading of overall consumer sentiment came in at 55.1, up 7% month-over-month. Survey Director Joanne Hsu said, “All components of the expectations index improved this month, particularly among low- and middle-income consumers for whom inflation is particularly salient.”
Additionally, despite rising recession fears, Tony Genua, lead manager of AGF Global Select Series F, said, “The market represents a good entry point because it’s down 24.5% from its high in January.” Moreover, he believes that it is likely that the economy will avoid a recession.
Given the backdrop, it could be wise to own fundamentally strong stocks CVS Health Corporation (CVS), APA Corporation (APA), Biogen Inc. (BIIB), and Centene Corporation (CNC) now.
CVS Health Corporation (CVS)
CVS provides health services in the United States. The company’s segments are Health Care Benefits; Pharmacy Services; and Retail/LTC. It operates approximately 9,900 retail locations and 1,200 MinuteClinic locations, online retail pharmacy websites, LTC pharmacies, and onsite pharmacies.
On August 11, 2022, CVS announced its $18.90 million investment to build 150 affordable housing units in Columbus, Ohio, to advance health equity. Mike Avotins, East Mid-America Market President for Aetna, a CVS Health company, said, “We’re making investments that will provide Columbus seniors and families with equal opportunity to secure housing and access to resources that will help support their health and wellbeing.”
CVS’ total revenues came in at $80.64 billion for the second quarter ended June 30, 2022, up 11% year-over-year. Its net income came in at $2.95 billion, up 6% year-over-year, while its EPS came in at $2.23, up 6.2% year-over-year.
CVS’ revenue is expected to increase 6.9% year-over-year to $312.35 billion in 2022. Its EPS is estimated to increase 5.8% per annum for the next five years. Also, it surpassed EPS estimates in each of the four trailing quarters. Over the past year, the stock has gained 24.6% to close the last trading session at $106.43.
CVS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CVS has an A grade for Growth and Stability and a B grade for Value and Sentiment. Within the B-rated Medical - Drug Stores industry, it is ranked #1 among five stocks. Click here to see the additional POWR Ratings for Momentum and Quality for CVS.
APA Corporation (APA)
APA and its subsidiaries explore for, develop, and produce oil and gas properties. It operates in the United States, Egypt, and the United Kingdom and has exploration activities offshore Suriname.
On August 3, 2022, John J. Christmann IV, APA’s CEO and President said, “Our diversified, unhedged portfolio benefitted from high prices across all three product streams, and we managed our largest spending categories – capital investment, operating costs, and general & administrative – very well despite an overall challenging supply chain and cost environment.”
APA’s total revenues increased 73.5% year-over-year to $3.05 billion for the second quarter ended June 30, 2022. Its adjusted earnings after tax came in at $811 million, up 204.9% year-over-year. Moreover, its adjusted EPS came in at $2.37, up 238.6% year-over-year.
Analysts expect APA’s revenue to be $10.97 billion in 2022, representing a 38.4% year-over-year rise. The company’s EPS is expected to increase 138.2% year-over-year to $9.29 in 2022. Over the past year, the stock has gained 93.9% to close the last trading session at $33.22.
APA's overall B rating indicates a Buy in our proprietary rating system. It has an A grade for Momentum and Quality and a B for Growth and Value.
APA is ranked #8 out of 97 stocks in the B-rated Energy - Oil & Gas industry. Click here to see the additional APA ratings for Stability and Sentiment.
Biogen Inc. (BIIB)
A pioneer in neuroscience, BIIB discovers, develops, and delivers worldwide innovative therapies for people living with serious neurological diseases as well as related therapeutic adjacencies.
On July 26, 2022, the U.S. Food and Drug Administration accepted BIIB’s New Drug Application for tofersen, an investigational drug for superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis (ALS). If approved, tofersen will become the first treatment to target a genetic cause of ALS and will make for a solid addition to BIIB’s product portfolio.
BIIB’s net income came in at $1.06 billion, up 135.9% year-over-year, for the second quarter ended June 30, 2022. Its EPS came in at $7.24, up 142.1% year-over-year. Also, its cash and cash equivalents came in at $958.50 million, up 87.9% year-over-year.
Street expects BIIB’s EPS to increase 3.5% year-over-year to $3.51 for the quarter ended December 2022. Moreover, it surpassed the EPS estimates in three of the trailing four quarters. The stock has gained marginally over the past month to close the last trading session at $219.64.
It’s no surprise that BIIB has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and Quality and a B for Sentiment.
BIIB is ranked #3 out of 404 stocks in the Biotech industry. Click here to get all the BIIB ratings (Growth, Momentum, and Stability).
Centene Corporation (CNC)
CNC operates as a multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States. Its segments are Managed Care; and Specialty Services.
On July 26, 2022, Sarah M. London, CNC’s CEO, said, “We are pleased that results are directly in line with the expectations laid out during our June Investor Day. Additionally, we are increasing our full-year adjusted EPS outlook, reflecting a $0.20 cumulative increase above our April guidance.”
For the second quarter ended June 30, 2022, CNC’s total revenues came in at $35.94 billion, up 15.8% year-over-year. Its net loss decreased 67.9% year-over-year to $172 million, while its loss per share came in at $0.29, down 68.5% year-over-year.
CNC’s revenue is expected to be $143.48 billion in 2022, representing a 13.9% year-over-year rise. In addition, the company’s EPS is expected to increase by 12.3% per annum for the next five years. Also, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 50.4% to close the last trading session at $96.33.
CNC has an overall A rating, equating to a Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, Sentiment, and Quality.
CNC is ranked #3 out of 11 stocks in the A-rated Medical - Health Insurance industry. Click here to see CNC’s ratings for Momentum and Stability.
CVS shares fell $0.13 (-0.12%) in premarket trading Wednesday. Year-to-date, CVS has gained 4.74%, versus a -9.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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