On Thursday, the broad market indices closed in the red. The Dow closed down 300 points, the S&P 500 slipped about 1.5%, while the Nasdaq Composite declined 2%, as market sentiment was weighed down by…
Fed chair Jerome Powell’s statement regarding the potential for larger-than-usual interest rate hike in the coming month. Also, Goldman Sachs Group Inc. (GS) sees the benchmark S&P closing at 4,700 this year in the best-case scenario or declining to end at 3,600 in a recessionary scenario.
Non-cyclical stocks are from companies that enjoy stable demand for their products even in economic downturns. The consumer non-cyclical sector looks resilient in the face of inflation, given that the Consumer Staples Select Sector SPDR Fund (XLP) has gained 4.4% year-to-date, while the broader SPDR S&P 500 ETF Trust (SPY) has declined 7.8% over the same period.
Given this backdrop, we think the stocks of fundamentally strong companies Cardinal Health, Inc. (CAH), Brookfield Infrastructure Corporation (BIPC), Smith & Nephew plc (SNN), Vertex Pharmaceuticals Incorporated (VRTX), and Bunge Limited (BG) would be ideal be bets to build up a resilient portfolio during market downturns.
Cardinal Health, Inc. (CAH)
CAH in Dublin, Ohio, is an integrated healthcare service and products company that operates through the two broad segments of Pharmaceutical and Medical. The company operates primarily in the United States, Canada, Europe, and Asia, providing customized solutions for hospitals, pharmacies, clinical laboratories, and patients at home.
On March 30, CAH announced its plans to build a medical distribution center in Columbus, Ohio, integrating automation and technology. This is expected to increase the company’s medical distribution footprint and aligns with its strategy of expanding warehouse capacity and inventory space.
On March 17, CAH launched its surgical incise drape using antiseptic Chlorhexidine Gluconate (CHG), which helps reduce the risk of surgical site contamination. The new product should expand the company’s product portfolio.
For its fiscal second quarter, ended Dec. 31, 2022, CAH’s revenue increased 9.4% year-over-year to $45.46 billion. For the six months ended December 31, the company’s net cash provided by investing activities came in at $815 million, up 526.7% from the prior-year period.
The Street’s $1.21 EPS estimate for the fiscal quarter ending June 30, 2022, indicates a 57.1% improvement from the prior-year quarter. Also, the Street’s $44.85 billion revenue estimate for the same period reflects a 5.3% year-over-year rise.
Over the past month, the stock has gained 10.7% in price to close yesterday’s trading session at $63.75. It has gained 23.8% year-to-date.
CAH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
CAH has a Growth grade of A and a Value grade of B. It is ranked #9 out of the 85 stocks in the Medical – Services industry.
In addition to the POWR Rating grades we have stated above, one can see CAH ratings for Momentum, Stability, Sentiment, and Quality here.
Brookfield Infrastructure Corporation (BIPC)
BIPC is the owner and operator of regulated natural gas transmission systems in Brazil. The New York City-based company also operates in the United Kingdom’s regulated gas and electricity distribution sector and in Australia’s electricity transmission and gas distribution sectors.
BIPC’s revenues increased 10.4% year-over-year to $414 million in its fiscal fourth quarter, ended Dec. 31, 2022. Its cash from operating activities rose 51.7% from the prior-year period to $220 million, while the company’s cash and cash equivalents balance came in at $469 million, up 144.3% from the same period the prior year.
BIPC’s shares have gained 28.6% in price over the past six months and 12.7% year-to-date to close yesterday’s trading session at $76.94.
It is no surprise that BIPC has an overall B rating, which translates to Buy in our POWR Rating system.
BIPC has a Momentum, Stability, and Quality grade of B. In the 62-stock Utilities – Domestic industry, it is ranked #1.
Click here to see the additional POWR Ratings for Growth, Value, and Sentiment for BIPC.
Smith & Nephew plc (SNN)
SNN, which is headquartered in Watford, U.K., operates as the developer, manufacturer, marketer, and seller of medical devices globally. The company’s offerings include knee implant products, hip implants, trauma and extremities products, and sports medicine joint repair products for surgeons.
On January 26, SNN announced the expansion of its indications on its CORI Surgical System, a handheld robotic solution for total knee arthroplasty. The system was expanded to include total hip arthroplasty (THA). This is expected to bolster the company’s Real Intelligence digital ecosystem.
On January 19, SNN announced that it had acquired…
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