Despite volatile market conditions owing to the Russia-Ukraine war, supply chain bottlenecks, high inflation, and imminent aggressive federal interest rate increases, the Dow Jones Industrial Average has managed to advance over the past month on an improving labor market and strong corporate results. So, we think it could be wise to bet on quality Dow Jones stocks Johnson & Johnson (JNJ), Walmart (WMT), UnitedHealth Group (UNH), and The Travelers Companies (TRV). Read on.
The Russia-Ukraine war has aggravated global logistical disruptions, pushing inflation significantly higher. And the latest U.S. sanctions on Russia are expected to worsen supply disruptions. These factors, together with rising gas prices, are keeping the stock market under pressure. While economic growth is expected to decelerate, many experts don’t expect a recession in the near term. Michael Antonelli, managing director and market strategist at Baird, said, “I’m going to go in the ‘no recession’ camp for this year.”
Furthermore, according to Goldman Sachs, the U.S. economy might be able to avoid a contraction if it improves its current economic stability by expanding the labor market and consumer surplus. Given this backdrop, the Dow Jones Industrial Average has managed to gain 1.2% over the past month. Growing labor market optimism and impressive corporate earnings have helped the index stay in the green.
Given this backdrop, we think it could be wise to bet on quality Dow Jones stocks Johnson & Johnson (JNJ), Walmart Inc. (WMT), UnitedHealth Group Incorporated (UNH), and The Travelers Companies, Inc. (TRV).
Johnson & Johnson (JNJ)
JNJ in New Brunswick, N.J., researches, develops, manufactures, and sells a range of products in the healthcare field worldwide. It operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices. It has a 0.72 beta, indicating better stability than the broader market.
On April 19, 2022, Joaquin Duato, CEO, said, “Looking ahead, I remain confident in the future of Johnson & Johnson as we continue advancing our portfolio and innovative pipeline.”
JNJ’s reported sales increased 5% year-over-year to $23.43 billion in its fiscal year 2022 first quarter. Its adjusted net earnings came in at $7.13 billion, up 3% year-over-year, while its adjusted EPS came in at $2.67, up 3.1% year-over-year.
Analysts expect JNJ’s revenue and EPS to increase 3.7% and 6.1%, respectively, year-over-year to $100.75 billion and $10.96 in its fiscal 2023. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 10.5% in price to close yesterday’s session at $183.89.
JNJ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
JNJ has an A grade for Stability and a B grade for Quality. Within the Medical – Pharmaceuticals industry, it is ranked #9 of 170 stocks. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for JNJ.
Walmart Inc. (WMT)
WMT in Bentonville, Ark., operates retail, wholesale, and other units worldwide. The company has three segments: Walmart U.S.; Walmart International; and Sam’s Club. WMT is a leader in sustainability, corporate philanthropy, and employment opportunities. It has a beta of 0.55.
On April 5, 2022, WMT Health announced its expansion in Florida with five new Health Centers. Dr. David Carmouche, senior vice president of Omnichannel Care Offerings at WMT, said, “Two years after the launch of Walmart Health, we continue evolving and growing to make health care even more accessible to the communities we serve.”
For its fiscal year 2022 fourth quarter, ended Jan. 31, 2022, WMT’s total revenues came in at $152.87 billion, compared to $152.08 billion in the previous period. Its net income was $3.56 billion, versus a $2.09 billion loss in the year-ago period. Also, its adjusted EPS was $1.53, up 10.1% year-over-year.
Analysts expect WMT’s revenue to be $611.13 billion in its fiscal year 2024, representing a 3.5% year-over-year increase. The company’s EPS is expected to rise 8.4% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 13.4% in price to close yesterday’s trading session at $159.63.
WMT has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
In addition, it has a B grade for Growth, Stability, Sentiment, and Quality. WMT is ranked #6 of 39 stocks in the Grocery/Big Box Retailers industry. Click here to see the additional POWR Ratings for WMT (Value and Momentum).
UnitedHealth Group Incorporated (UNH)
UNH operates as a diversified health care company in the United States. The Minnetonka, Minn.-based company has four segments: UnitedHealthcare; OptumHealth; OptumInsight; and OptumRx. The stock has a 0.88 beta.
On April 14, 2022, Andrew Witty, UNH’s CEO, said, “Disciplined execution of our long-term strategy, with a sharp focus on ensuring access to care for the people we serve, enabled us to deliver high-quality, diversified growth across Optum and UnitedHealthcare during this first quarter of 2022.”
UNH’s total revenues came in at $80.15 billion, up 14.2% year-over-year for its fiscal year 2022 first quarter, ended March 31, 2022. Its adjusted net earnings came in at $5.24 billion, up 3% year-over-year, while its adjusted EPS came in at $5.49, up 3.4% year-over-year.
For its fiscal year 2022, UNH’s revenue is expected to grow 11.6% year-over-year to $320.91 billion. Its EPS is also estimated to grow 14.6% per annum for the next five years. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 37.7% in price to close yesterday’s trading session at $546.01.
UNH has an overall A rating, representing a Strong Buy in our POWR Ratings system. It has a B grade for Growth, Stability, and Quality.
The Travelers Companies, Inc. (TRV)
New York City-based TRV, through its subsidiaries, provides a range of commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals in the United States and internationally. Its three segments are: Business Insurance; Bond & Specialty Insurance; and Personal Insurance. The stock has a beta of 0.71.
On April 19, 2022, Alan Schnitzer, Chairman and CEO, said, “The significant innovation and technology investments we have been making for some time are driving our performance today and transforming Travelers into the insurance company of the future. We are innovating on top of a foundation of excellence to ensure our continued success through competitive advantages that are relevant, differentiating, and difficult to replicate.”
TRV’s total revenues increased 6% year-over-year to $8.81 billion for its first quarter ended March 31, 2022. Its net income came in at $1.02 billion, up 38.9% year-over-year, while its EPS came in at $4.15, up 45% year-over-year.
Analysts expect TRV’s revenue to grow 7.7% year-over-year to $34.42 billion in 2022. In addition, the company’s EPS is expected to increase 10.8% to $14.63 in 2023. Also, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 14.1% in price to close yesterday’s trading session at $177.71.
TRV has a B grade for Stability. It is ranked #17 of 56 stocks in the B-rated Insurance – Property & Casualty industry. Click here to see the additional POWR Ratings for Growth, Value, Momentum, Sentiment, and Quality for TRV.
JNJ shares rose $1.10 (+0.60%) in premarket trading Thursday. Year-to-date, JNJ has gained 8.83%, versus a -5.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentaries.