The stock markets witnessed a sharp pullback since the detection of the highly contagious omicron coronavirus variant in South Africa. The World Health Organization (WHO) has stated that the new variant is a “cause for concern,” leading to the reimposition of travel restrictions and lockdowns across the globe. Over the past five days, the S&P 500 index fell 2.3%, and the Dow Jones Industrial Average (DJIA) declined 2.7%. The CBOE Volatility Index, on the other hand, rose 29.2% last week. Crude oil witnessed its worst day in 2021 on November 26, as prices fell 13% due to the new variant scare.
As the reimposition of the travel ban is expected to affect international trade amid continued supply chain disruptions, the markets are expected to remain volatile for some time until the transmission rate of omicron is determined. While renowned U.S. health official Dr. Fauci has stated that it is “too early to say” whether lockdowns will be reimposed, the probability of the same cannot be negated. However, as more than 80% of U.S. adults are vaccinated, the country is expected to remain shielded from extreme repercussions.
Given the volatile market conditions, investing in relatively stable stocks with a beta of less than 1 is ideal. Thus, fundamentally sound stocks Microsoft Corporation (MSFT), Johnson & Johnson (JNJ), UnitedHealth Group Incorporated (UNH), and The Kroger Co. (KR), which have a beta of less than 1, could be ideal bets now.
Microsoft Corporation (MSFT)
Software giant MSFT briefly surpassed Apple, Inc. (AAPL) to become the world’s most valuable company in terms of market capitalization on October 29. Ranked #15 in the Fortune 500 list, MSFT is one of the biggest names in the tech space, with a $2.48 trillion market capitalization.
For the fiscal 2022 first quarter ended September 30, MSFT’s revenues increased 22% year-over-year to $45.30 billion. Operating income came in at $20.20 billion, up 27% from the same period last year. Non-GAAP net income rose 24% from the prior-year quarter to $17.20 billion, while EPS improved 25% from the year-ago value to $2.27.
On November 12, MSFT partnered with IT infrastructure services provider Kyndryl to develop and market state-of-the-art solutions to accelerated hybrid cloud adoption. This joint venture is expected to provide incremental multi-billion dollar revenue opportunities for both companies.
In the same month, MSFT partnered with Caterpillar Inc. (CAT) and Ballard Power Systems to develop a power system using large-format hydrogen fuel cells to provide reliable backup power for data centers. The three-year project is in line with MSFT’s aim to become carbon negative by 2030.
The consensus EPS estimate of $2.31 for the fiscal 2022 second quarter (ending December 2021) indicates a 13.7% rise year-over-year. Analysts expect MSFT’s revenues to improve 17.2% from the same period last year to $50.50 billion. The company has an impressive earnings history as well, as it beat Street EPS estimates in each of the trailing four quarters.
MSFT has gained 48.2% year-to-date to close Friday’s trading session at $329.68. With a 0.86 beta, it is a relatively stable stock.
MSFT has an overall rating of B, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
MSFT has a grade of B for Stability, Sentiment, and Quality. Of the 168 stocks in the Software – Application industry, it is ranked #20.
Click here to view additional MSFT ratings for Growth, Value, and Momentum.
Johnson & Johnson (JNJ)
JNJ is a leading healthcare and FMCG company, operating in three segments – Consumer; Pharmaceutical; and Medical Devices. JNJ was named as one of the 100 most influential companies in the world by the Times. It was also mentioned in Fortune’s 2021 Change the World list.
JNJ’s COVID-19 vaccine has been approved for emergency use in the United States. Also, the company plans to supply its single-shot vaccine to the most vulnerable people across the globe.JNJ’s net sales rose 10.7% year-over-year to $23.34 billion in the fiscal third quarter ended September 30. Adjusted net earnings rose 18.7% from the same period last year to $6.97 billion, while EPS grew 18.2% from the prior-year period to $2.60.
JNJ is currently in the process of restructuring its business model. On November 12, the company announced its plans to separate its Consumer Health business segment by creating a new publicly traded entity. However, JNJ is expected to remain the world’s largest and most diverse healthcare company. The spun-off Consumer Health company is expected to become a leading global consumer health company, with more than 1 billion customers.
Street expects JNJ’s revenues and EPS to rise 12.3% and 14.5% year-over-year to $25.23 billion and $2.13, respectively, in the fiscal fourth quarter (ending December 2021).
JNJ has a beta of 0.70, making it a relatively Stable stock. It has gained 10.6% over the past year.
It’s no surprise that JNJ has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The stock has a Stability grade of A, and a Growth grade of B. Also, it is ranked #1 out of 199 stocks in the Medical – Pharmaceuticals industry.
Beyond what we’ve stated above, view JNJ ratings for Quality, Sentiment, Value, and Momentum here.
UnitedHealth Group Incorporated (UNH)
UNH is a health care and medical insurance provider operating in four segments - UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. The diversified healthcare company provides consumer-oriented healthcare benefit plans to individuals and employers.
UNH was included in the 2021 Dow Jones Sustainability North America Index and 2021 Dow Jones Sustainability World Index for the 23rd consecutive year on November 16. This reflects the company’s leading position in the industry and its sustainable long-term growth prospects.
On November 24, UNH partnered with MassHealth to provide its comprehensive health benefits plan, One Care to Massachusetts. This expansion should improve UNH’s revenues and earnings substantially over the long term.
UNH’s third quarter (ended September 30) revenues rose 11.1% year-over-year to $72.34 billion. Earnings from operations came in at $5.70 billion, up 21.3% from the same period last year. Adjusted EPS improved 28.8% from the prior-year quarter to $4.52.
Street expects UNH’s revenues to increase 10.7% year-over-year to $72.48 billion in the current quarter (ending December 2021). EPS is expected to come in at $4.31 in the fiscal fourth quarter, indicating a 71% improvement from the same period last year. Also, UNH surpassed consensus EPS estimates in each of the trailing four quarters, which is impressive.
With a 0.85 beta, UNH is a relatively stable stock. It has gained 33.2% over the past year to close Friday’s trading session at $439.91.
UNH’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to Strong Buy in our POWR Ratings system. It has a grade of B for Value, Growth, and Quality. Also, the stock is ranked #1 out of 11 stocks in the B-rated Medical – Health Insurance industry.
In total, we rate UNH on eight different levels. View UNH ratings for Momentum, Stability, and Sentiment here.
The Kroger Co. (KR)
KR is the largest grocery retailer in the United States. It also offers pharmaceutical products, cosmetics, furniture, and electronics. The company has been actively expanding its presence by opening new retail outlets and fulfillment centers. Also, its online website has been a major revenue source since the pandemic, thanks to the tremendous rise in online shopping.
KR’s net sales improved 3.9% year-over-year to $31.70 billion in the fiscal second quarter ended August 14. Operating profit rose 2.3% from the year-ago value to $839 million. Adjusted EPS stood at $0.80, up 9.6% from the same period last year.
On November 2, KR partnered with Bed Bath & Beyond Inc. (BBBY) to offer BBBY’s products directly to KR customers from next year. This partnership should boost KR’s commission revenues and income. Earlier in October, KR’s subsidiary Home Chef crossed $1 billion in annual sales, reflecting its position in the industry.
KR’s revenue is expected to rise 2.5% year-over-year to $135.79 billion in fiscal 2022. Moreover, analysts expect the company’s EPS to rise at a 6.4% CAGR over the next five years. KR has an impressive earnings surprise history, as it beat Street EPS estimates in each of the trailing four quarters.Shares of KR have gained 35.8% year-to-date and 16.7% over the past six months. With a 0.43 beta, KR is a relatively stable stock.
KR has an overall rating of B, which equates to Buy in our POWR Ratings system. Also, it has a grade of B for Growth and Quality. KR is ranked #25 out of 40 stocks in the A-rated Grocery/Big Box Retailers industry.
We have also rated KR for Growth, Momentum, Sentiment, and Stability. Get all KR ratings here.
MSFT shares . Year-to-date, MSFT has gained 52.62%, versus a 25.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.Worried About a Crash? Consider Buying These 4 Stocks Right Now appeared first on StockNews.com