Rising inflation and fears of a recession have roiled the U.S. stock markets for most of 2022. The global economy has been rattled by the Ukraine war, lingering supply chain troubles and a sweeping energy crisis in Europe. Aggressive rate hikes by the Federal Reserve to curb inflation have kept investors on tenterhooks.
Year to date, the tech-heavy Nasdaq Composite and S&P 500 have dropped 28.8% and 16.3%, respectively. The Dow Jones Industrial Average is also down 6.4%.
Identifying stocks to add to the investment portfolio in such a highly volatile market scenario can be quite challenging.
Nevertheless, few Dow stocks have bucked the general trend and have seen price appreciation in the year. Investors might consider adding these stocks, which have proven resilient compared to the Dow Jones index.
Dow Jones equity index consists of 30 of the country’s most prominent and valuable companies or blue-chip companies. Adding blue chip stocks to one’s portfolio amid a volatile market scenario is mostly considered as a safe investment bet.
Blue chip stocks are usually less volatile to market vagaries. These companies generally have a large market cap, solid cash flows, a healthy balance sheet and, in most cases, a stable dividend policy.
Therefore, we bring you the top five stocks —
Chevron Corporation
CVX
,
Merck & Co
MRK
,
Amgen
AMGN
,
The Travelers Companies, Inc
TRV
and
International Business Machines Corporation
IBM
— that have fared relatively better than the Dow Jones Index this year for investment consideration.
5 Stocks that Minimized Dow Jones Losses
Chevron
: Chevron is one of the largest publicly traded oil and gas companies in the world and is the only energy component of the Dow Jones Industrial Average. Shares of Chevron have risen 44.7% year to date, outperforming Dow Jones and the Zacks
sub-industry
’s 43.7% gain during the same period.
Chevron is considered one of the best-placed global integrated oil firms to achieve sustainable production ramp-up. The energy firm’s existing project pipeline is among the best in the industry, owing to its premier position in the lucrative Permian Basin.
As of Sep 30, the San Ramon, CA-based company had $15.2 billion in cash and cash equivalents and total debt of $23.6 billion with a debt-to-total capitalization of a modest 12.9%.
Chevron’s earnings and cash flows have been steadily improving, boosted by higher crude realizations and a recovery in consumption. Earlier in the year, Chevron raised its quarterly dividend by 6% to $1.42 per share (or $5.68 per share annualized) and promised anything between $5 billion and $15 billion worth of buybacks each year. Chevron recorded $37.1 billion in cash flow from operations during the nine months ended Sep 30, surging from $19.7 billion a year ago.
The Zacks Consensus Estimate for 2022 earnings has been revised upward by $1.12 to $19.17 per share over the past 60 days, indicating a year-over-year increase of 135.8%.
Image Source: Zacks Investment Research
Merck & Co
: Merck & Co boasts more than six blockbuster drugs in its portfolio with PD-L1 inhibitor, Keytruda, approved for several types of cancer, alone accounting for around 40% of its pharmaceutical sales. Merck’s shares have risen 42.2% this year so far compared with 12% gain by the
sub-industry
.
Keytruda has played an important role in driving Merck’s steady revenue growth in the past few years. Keytruda sales are benefiting from healthy momentum in metastatic indications, including in some types of NSCLC, renal cell carcinoma, head and neck squamous cell carcinoma, TNBC and MSI-H cancers. Its new COVID oral antiviral pill, Lagevrio has become a key top-line driver in 2022.
The Zacks Consensus Estimate for 2022 earnings has been revised upward by 1 cent to $7.38 per share over the past 60 days, indicating a year-over-year increase of 22.6%.
Amgen
: Amgen is one of the prominent biotech companies in the world, with a strong presence in the oncology/hematology, inflammation, cardiovascular disease, neuroscience, bone health and nephrology and neuroscience markets. Amgen’s shares have risen 23% this year so far, outperforming a decrease of 18.5% for the
sub-industry.
Amgen’s performance is being driven by strength in key drugs, namely Repatha, Otezla, Prolia and Evenity. In the last reported quarter, these drugs generated a combined $2 billion in sales with volume growth of 17%.
New drugs Lumakras and Tezspire are off to an encouraging start. The acquisition of ChemoCentryx has added a strategic new growth asset to Amgen’s portfolio.
The Zacks Consensus Estimate for 2022 earnings has been revised upward by 20 cents to $17.66 per share over the past 60 days, indicating a year-over-year increase of 3.3%.
The Travelers Companies
: The company, through its subsidiaries, provides a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States and select international markets.
Shares of Travelers have gained 19.6% outperforming the
sub-industry
’s increase of 5.1% in a year.
Travelers boasts a strong market presence in auto, homeowners’ insurance and commercial U.S. property-casualty insurance with solid inorganic growth. A high retention rate, increase in new business and positive renewal premium change augur well.
The company remains positive about the personal line of business, given growth at the profitable agency auto and homeowners business. It anticpiates fixed income NII or net investment income, including earnings from short term securities, to be around $500 million (after-tax) in the fourth quarter.
Consistent efforts to return excess capital to shareholders through dividend hike and share buybacks bode well. In the first nine months of 2022, the company repurchased $1.5 billion worth of shares and about $60 million that were not part of its publicly announced share repurchase authorizations. As of Sep 30, 2022, the company had $2.51 billion of capacity remaining under its share repurchase authorizations.
IBM
: IBM has gradually evolved as a provider of cloud and data platforms. Red Hat acquisition, in particular, has helped it in strengthening competitive position in the hybrid cloud market. It announced the spin-off of its legacy Managed Infrastructure Services business in a bid to accelerate its hybrid cloud growth strategy. Shares of IBM have gained 11.6% outperforming the
sub-industry
’s decrease of 1.9% in a year.
IBM is poised to benefit from strong demand for hybrid cloud and AI, driving growth in Software and Consulting. In the last reported quarter, revenues from Software business improved to $5,811 million from $5,406 million, driven by growth in Hybrid Platform & Solutions and Transaction Processing.The Zacks Consensus Estimate for 2022 earnings stands at $9.12 per share, indicating a year-over-year increase of 15%.
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