This year, the stock market has experienced high volatility due to various macroeconomic and geopolitical concerns. The Dow Jones Industrial Average (DJIA) has declined 10.5% year-to-date, while the Nasdaq Composite (COMP) fell 22.2%. The benchmark S&P 500 index also declined 14.6% year-to-date.
With inflation hitting a multi-decade high, the Fed’s aggressive interest rate hikes to bring the prices down and the consequent possibility of a recession have amplified the market volatility. According to the Bureau of Economic Analysis report, the U.S. economy declined for the second consecutive quarter, with the Gross Domestic Product declining at an annualized rate of 0.9%. Therefore, many analysts believe that the economy has already entered a recession.
Since the beginning of the year, many stocks in the S&P 500 have gotten hammered. However, CVS Health Corporation (CVS) and Verizon Communications Inc. (VZ) have outperformed the most widely followed benchmark year-to-date. These stocks could maintain their momentum given their solid fundamentals and growth prospects. So, we think it could be wise to add them to your watchlist.
CVS Health Corporation (CVS)
CVS is a health service provider operating through four segments: Health Care Benefits, Pharmacy Services, Retail/LTC, and Corporate/Other. Its offerings include health & wellness services, health plans, pharmacy services, and prescription drug coverage.
On May 26, 2022, the company launched CVS Health Virtual Primary Care, a new virtual care solution available through a single digital platform. Demonstrating CVS’ bold strategy to improve primary care, the new solution offers a more coordinated health care experience for patients and providers through at-home health services or virtually.
On June 21, 2022, CVS announced the expansion of the free health screening program as part of its commitment to advance health equity in two new areas: Las Vegas, NV, and Richmond, VA.
CVS’ total revenue for the fiscal first quarter ended March 31, 2022, increased 11.2% year-over-year to $76.83 billion. The company’s adjusted operating income grew 6.6% year-over-year to $4.48 billion, while its net income rose 4% from the year-ago value to $2.31 billion. Also, its adjusted EPS increased 8.8% year-over-year to $2.22.
Analysts expect CVS’ EPS and revenue for the quarter ending September 30, 2022, to increase 2.8% and 4.5% year-over-year to $2.02 and $77.14 billion, respectively. It has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 7.4% year-to-date to close the last trading session at $95.53.
CVS’ POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of A, translating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CVS has a B grade for Value, Stability, and Sentiment. It is ranked first out of 5 stocks in the Medical - Drug Stores industry. Click here to see the other ratings of CVS for Growth, Momentum, and Quality.
Verizon Communications Inc. (VZ)
VZ offers communication, information, and entertainment products and services to consumers, businesses, and governmental agencies. The company operates through two segments: Consumer Group; and Business Group, providing wireless and wireline communications services and products in the United States.
On July 26, 2022, VZ introduced the Lenovo ThinkPad X13s, a business-ready PC to leverage full 5G Ultra-Wideband connectivity. This new launch reflects the company’s full capabilities in accelerating its 5G Ultra-Wideband network and is expected to be highly demanded by consumers.
During the second quarter ended June 30, 2022, VZ’s total operating revenues remained relatively flat year-over-year to $33.79 billion. Its wireless equipment revenues rose 20.4% from the year-ago value to $6.67 billion. In addition, the company reported 268,000 total broadband net additions, a 39,000 increase from the first quarter, and 256,000 fixed wireless net additions, which is nearly 1.32 times the previous quarter.
The consensus EPS estimate of $5.28 for fiscal 2023 (ending December 2023) represents a 2% improvement year-over-year. The consensus revenue estimate of $33.87 billion for the third quarter ending September 30, 2022, indicates a 2.9% increase from the same period last year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has lost 12.3% year-to-date to close the last trading session at $45.55.
VZ’s POWR Ratings reflect this promising outlook. The company has a B grade for Stability. Within the Telecom - Domestic industry, it is ranked #4 of 19 stocks. Click here to see additional POWR Ratings for Growth, Value, Momentum, Sentiment, and Quality for VZ.
CVS shares were trading at $95.36 per share on Friday morning, down $0.17 (-0.18%). Year-to-date, CVS has declined -6.04%, versus a -13.10% 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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