A hotter-than-expected September inflation reading has rattled financial markets, and investors now expect a 0.75 percentage point rate hike by the Fed in November and December. The Federal Reserve is strongly…
committed to control inflationary pressure.
“The more inflation comes in above expectations, the more they’re going to have to prove that commitment, which means higher interest rates and cooling in the underlying economy,” said Michelle Meyer, chief U.S. economist at the Mastercard Economics Institute. This is increasing the chances of an impending recession.
However, according to Morgan Stanley’s strategist Michael J. Wilson, the stock market could witness a short-term rally. He also believes that inflation has now peaked and “could fall rapidly next year.”
Given the backdrop, we think investors should invest in fundamentally solid stocks Cigna Corporation (CI) and SX Corporation (CSX), which look poised to generate significant returns in the long run.
Cigna Corporation (CI)
CI provides insurance and related products and services in the United States. It sells its offerings through insurance brokers and consultants. The company operates through the Evernorth; and Cigna Healthcare segments.
On October 12, CI announced the availability of comprehensive and cost-effective health plans for Texas residents on the individual marketplace this year. This should provide access to affordable, predictable, and simple healthcare coverage and attract more customers.
On September 15, Evernorth, CI’s health services business segment, expanded its Digital Health Formulary to include five new app-based programs and help people better manage their sleep issues, anxiety, alcohol and opioid use disorders, and inflammatory conditions. This should help the company address the unmet needs of patients with chronic health conditions.
For its second quarter ended June 30, 2022, CI’s total revenues increased 5.4% year-over-year to $45.48 billion. Its adjusted income from operations came in at $1.98 billion, up 9.6% year-over-year, while its adjusted EPS came in at $6.22, up 18.7% year-over-year.
Analysts expect CI’s revenue to increase 3.3% year-over-year to $179.89 billion in fiscal 2022. Its EPS is estimated to increase 12.4% year-over-year to $23 in the same period.
The stock has gained 45.4% over the past year and 28.6% year-to-date to close the last trading session at $295.30.
CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of…
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