The stock market has been rattled since the beginning of 2022 due to the concerns surrounding forthcoming interest rate increases, skyrocketing inflation rates, and escalating war tensions between Russia and Ukraine. Amid the war between Russia and Ukraine, U.S. oil prices spiked to their highest level since 2008, crossing the $130 per barrel level. Consequently, Dow Futures declined more than 300 points.
The cyclical Dow Jones Industrial Average (DJIA) index declined 7.5% year-to-date. This can be attributed to surging market volatility, which is evident in the CBOE’s Volatility Index’s 93.2% increase year-to-date. However, the index represents the top 30 companies listed in the U.S. exchanges in terms of market capitalization. These companies tend to have strong fundamentals and cash flows and hence should be able to weather the current market weakness easily.
Given these factors, we think investors should consider buying renowned stocks Microsoft Corporation (MSFT), Cisco Systems, Inc. (CSCO), and Walgreens Boots Alliance, Inc. (WBA) on the dip.
Microsoft Corporation (MSFT)
MSFT in Redmond, Wash., develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On March 4, 2022, MSFT completed the acquisition of Nuance Communications Inc. (NUAN), which will accelerate industry-specific cloud strategy infused with vertically optimized AI. This acquisition is expected to promote MSFT’s business goals and profitability.
On Feb. 1, 2022, MSFT collaborated with Striim to deliver fast, zero-downtime migration from cross-cloud databases to Microsoft’s Azure databases with ongoing data synchronization to minimize business disruptions. This collaboration might accelerate the data modernization journey to Azure, expand the customer base, and boost the company’s revenues.
In its fiscal year 2022 second quarter, ended Dec. 31, 2021, MSFT's total revenue increased 20.1% year-over-year to $51.73 billion. Its gross margin grew 20.4% year-over-year to $34.77 billion. MSFT’s operating income rose 24.3% year-over-year to come in at $22.25 billion. And its net income increased 21.4% from its year-ago value to $18.77 billion. The company’s earnings per share grew 22.2% from the year-ago value to $2.48.
The $49.02 billion consensus revenue estimate for its fiscal year 2022 third-quarter, ending March 31, 2022, represents 17.5% year-over-year growth. The $2.19 consensus EPS estimate for the current quarter indicates 12.5% year-over-year growth. And MSFT has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of all the trailing four quarters.
The stock declined 13.8% in price year-to-date and closed Friday’s trading session at $289.86.
MSFT’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
MSFT has a grade of A for Sentiment and a B for Quality and Stability. Within the Software - Application industry, it is ranked #17 of 165 stocks.
To see additional POWR Ratings (Value, Growth, and Momentum) for MSFT, click here.
Click here to check out our Software Industry Report for 2022
Cisco Systems, Inc. (CSCO)
CSCO designs, manufactures, markets, and sells internet protocol-based networking and other IT products and solutions in the U.S., Europe, Middle East, Africa, Asia Pacific, Japan, and China. The San Jose, Calif.-based company provides infrastructure platforms, collaboration products, security products, technical support, and advanced services. It serves businesses, governments, public institutions, and service providers.
Last week, CSCO and Rakuten Symphony, Inc., a wholly-owned subsidiary of Rakuten Mobile Inc., signed a strategic agreement to accelerate the delivery for 4G/5G mobile networks based on Open Radio Access Network (ORAN) technology. The move is expected to extend the company’s customer reach and boost revenues.
CSCO’s revenue increased 6.4% year-over-year to $12.72 billion in its fiscal year 2022 second quarter, ended Jan. 29, 2022. CSCO’s gross margin grew marginally year-over-year to $8.05 billion. Its operating income grew 8.2% year-over-year to $3.49 billion. And its net income improved 5.5% year-over-year to $3.55 billion. The company’s earnings per share increased 6.3% from its year-ago value to $0.84.
Analysts expect CSCO’s revenue for its fiscal year 2022 third-quarter, ending April 31, 2022, to come in at $13.33 billion, representing a 4.2% rise year-over-year. The Street expects the company’s EPS for the current quarter to be $0.86, representing a 3.9% increase year-over-year. CSCO has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of CSCO have declined 10.8% in price year-to-date and closed Friday’s trading session at $56.51.
CSCO has an overall B rating, which translates to Buy in our POWR Ratings system. It has a grade of A for Quality. It is ranked #6 of 55 stocks in the Technology - Communication/Networking industry.
Click here to see CSCO ratings for Momentum, Stability, Growth, Value, and Sentiment.
Walgreens Boots Alliance, Inc. (WBA)
WBA is a pharmacy-led health and beauty retail company that operates in two segments: the United States; and International. The Deerfield, Ill., company provides prescription drugs, an assortment of retail products, central specialty pharmacy services, and mail services. WBA’s retail and business brands portfolio includes Walgreens, Duane Reade, Boots, and other global health and beauty product brands.
Last month , WBA and VillageMD announced plans to open five new full-service primary care practices in Jacksonville through summer 2022. These new openings represent a business expansion in the major market of Florida. This expansion might expand WBA’s customer base and accelerate the company’s business growth.
In its fiscal year 2022 first quarter, ended Nov.30, 2021, WBA’s sales increased 7.8% year-over-year to $33.90 billion. Its gross profit grew 14.2% year-over-year to $7.57 billion. Its adjusted net earnings attributable to WBA rose 38.3% from its year-ago value to $1.46 billion. And the company’s adjusted net earnings per common share increased 37.7% from its year-ago value to $1.68.
The $33.21 billion consensus revenue estimate for its fiscal year 2022 second quarter, ended Feb. 28, 2022 represents marginal year-over-year growth from the same period in 2021. The $1.39 consensus EPS estimate for the second quarter indicates 10.2% year-over-year growth. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
WBA stock has declined 8.5% in price year-to-date and closed yesterday’s trading session at $47.72.
WBA’s strong fundamentals are reflected in its POWR Ratings. The company has an overall B rating, which translates to Buy in our proprietary rating system.
It has a B grade for Value and Sentiment. Among the four stocks in the A-rated Medical -Drug Stores industry, it is ranked #2.
Click here to see the additional POWR Ratings for Momentum, Quality, Growth, and Stability for WBA.
Click here to checkout our Healthcare Sector Report for 2022
MSFT shares were trading at $281.35 per share on Monday afternoon, down $8.51 (-2.94%). Year-to-date, MSFT has declined -16.17%, versus a -10.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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