The U.S. stock market has opened the first trading session of August in the green. Investors have lately been shrugging off concerns regarding the economic repercussions of the spread of the COVID-19 Delta variant. This is because the U.S. officially fully recovered from the pandemic in the second quarter with 6.5% GDP growth. Moreover, a recently approved bipartisan infrastructure bill proposal and the Fed’s unabated loose monetary policy are expected to keep the market bullish, offsetting concerns related to the resurgence of COVID-19.
Nevertheless, China’s crackdown on U.S. listings, and multi-year high inflation rates, are expected to remain the biggest drivers of market volatility. The CBOE Volatility Index has gained 5.7% over the past five days and 1.9% in the pre-market session today. And because analysts expect a rolling market correction to be on the horizon, we think investing in relatively stable industries, such as healthcare and telecom, which have a history of thriving in bearish markets, could be a wise decision now.
So, we think industry leaders Johnson & Johnson (JNJ), Abbott Laboratories (ABT), and Qualcomm Incorporated (QCOM) are well-positioned to gain substantially in the coming months, despite the market volatility.
Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells health care products and provides related services. The New Brunswick, N.J. company primarily serves consumer, pharmaceutical, and medical devices and diagnostics markets.
On July 30, 2021, JNJ’s Janssen Pharmaceutical Companies announced that the U.S. Food and Drug Administration (FDA) had approved UPTRAVI injections for intravenous (IV) use for the treatment of pulmonary arterial hypertension (PAH, WHO Group I) in adult patients with WHO functional class (FC) II–III, who are temporarily unable to take oral therapy. Given the progress of this disease and the importance of its treatment, the company is likely to witness good sales of this product in the coming months.
JNJ’s Johnson & Johnson Vision subsidiary announced the availability of TECNIS Synergy and TECNIS Synergy Toric II IOLs in the United States and Canada on June 23. This next-generation presbyopia-correcting IOL combines the best of extended depth of focus and multifocal technologies to deliver the widest range of continuous vision and the best near vision among leading PC-IOLs. Because ophthalmologists are now using this breakthrough PC-IOL to help treat cataract patients, offering them the opportunity to experience excellent outcomes, the company expects to witness expanded market reach with the therapy.
JNJ’s net sales for its fiscal second quarter, ended July 4, 2021, increased 27.1% year-over-year to $23.31 billion. The company’s gross profit came in at $15.73 billion, up 33.8% from the year-ago period. Its operating income has been reported at $6.28 billion, representing a 73.1% increase from the prior-year period. JNJ’s adjusted net earnings came in at $6.63 billion, representing a 49% year-over-year improvement. Its adjusted EPS increased 48.5% year-over-year to $2.48. The company had $14.33 billion in cash and cash equivalents as of July 4, 2021.
Analysts expect the stock’s EPS to increase 7.2% for the current quarter (ending September 30, 2021) to $2.36. JNJ surpassed the Street’s EPS estimates in each of the trailing four quarters. The $23.82 billion consensus revenue estimate for the current quarter represents a 13% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 7.5% rate per annum over the next five years. The stock has gained 25.6% over the past nine months and 4.5% over the past month. It closed Friday’s trading session at $172.20.
It’s no surprise that JNJ has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth and Stability, and a B grade for Value and Quality. Click here to see the additional ratings for JNJ’s Momentum and Sentiment.
JNJ is ranked #1 of 220 stocks in the Medical – Pharmaceuticals industry.
Abbott Laboratories (ABT)
ABT discovers, develops, manufactures, and sells a diversified line of health care products focused on cardiovascular, diabetes care, diagnostics, neuromodulation, nutrition, and medicine. Its products are sold directly to wholesalers, distributors, government agencies, health care facilities, pharmacies, and independent retailers from company-owned distribution centers and public warehouses. ABT is headquartered in Abbott Park, Ill.
On July 29, ABT announced the U.S. launch of its latest insertable cardiac monitor (ICM), Jot Dx, which allows for remote detection and improved diagnostic accuracy of cardiac arrhythmia in patients. Jot Dx ICM is supported by SyncUP, a personalized service that delivers one-on-one training and education to help patients stay connected to their ICM. Amid the rising focus on telehealth and connected care technology, this ICM will likely gain expanded market reach in the coming months.
On June 30, ABT’s XIENCE family of stents received U.S. FDA approval for 28 days’ DAPT labeling for high bleeding risk (HBR) patients in the U.S. It has also received a CE Mark approval for DAPT recently, giving it the shortest DAPT indication in the world. This FDA approval for DAPT should give ABT’s interventional cardiologists’ confidence in delivering the best care to HBR patients. A short DAPT duration minimizes risks for high-bleeding-risk patients and allows them to return to daily life sooner and with more assurance.
For its fiscal second quarter, ended June 30, 2021, ABT’s net sales came in at $10.22 billion, representing a 39.5% increase from the prior-year period. The company’s adjusted gross profit increased 41.8% year-over-year to $5.82 billion. Its adjusted operating income has been reported at $2.47 billion for the quarter, up 99.6% from the prior-year period. While its adjusted net earnings increased 107.8% year-over-year to $2.12 billion, its adjusted EPS increased 105.3% year-over-year to $1.17.
For the current year, analysts expect ABT’s revenue to be $9.46 billion, representing a 6.9% rise from the prior-year period. The stock has surpassed consensus EPS estimates in each of the trailing four quarters. Analysts expect ABT’s EPS to grow at a 12.8% rate per annum over the next five years. ABT has rallied 15.1% over the past nine months and 4.4% over the past month. It ended Friday’s trading session at $120.98.
ABT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has a B grade for Growth, Stability, Sentiment, and Value. We also have graded ABT for Quality and Momentum. Click here to access all ABT ratings.
ABT is ranked #10 in the Medical – Pharmaceuticals industry.
Qualcomm Incorporated (QCOM)
QCOM is a San Diego, Calif.-based multinational semiconductor and telecommunications equipment company that develops and delivers products and services based on its code-division multiple access (CDMA) technology used in digital wireless communications equipment and satellite ground stations.
On July 25, QCOM’s Qualcomm Technologies, Inc. completed the world’s first 5G mmWave data connection with 200 MHz carrier bandwidth support. This milestone supports and enables acceleration of 5G mmWave adoption in anticipation of 5G mmWave rollouts in China, while enhancing coverage, power efficiency, and performance for users through the advanced features and capabilities of the Snapdragon X65.
On July 26, 2021, QCOM’s Qualcomm Technologies, Inc. and Foxconn Industrial Internet announced the design, manufacture, and launch of Gloria AI Edge Box with the Qualcomm Cloud AI 100 inference accelerator. The companies are hoping to support BKAV Corporation, their first customer, to accelerate the adoption of intelligent edge applications.
For its fiscal third quarter, ended June 27, 2021, QCOM’s non-GAAP revenue increased 63.5% year-over-year to $8 billion. The company’s non-GAAP operating income has been reported at $2.67 billion, representing a 117.9% year-over-year improvement. QCOM’s non-GAAP net income came in at $2.20 billion, up 124% from the prior-year period. Its non-GAAP EPS increased 123.3% year-over-year to $1.92. As of June 27, 2021, the company had $7.40 billion in cash and cash equivalents. A $2.25 consensus EPS estimate in the current quarter, ending September 30, 2021, represents a 55.2% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect QCOM’s revenue to improve 35.6% year-over-year for the current quarter, to $8.82 billion. The stock’s EPS is expected to grow at a 27.3% rate per annum over the next five years.
The stock has gained 21.4% over the past nine months and 4.8% over the past six months. It ended Friday’s trading session at $149.80.
QCOM’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Sentiment, Quality, and Value. Click here to see the additional ratings for QCOM (Stability and Momentum).
QCOM is ranked #4 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.
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JNJ shares were trading at $172.40 per share on Monday afternoon, up $0.20 (+0.12%). Year-to-date, JNJ has gained 10.91%, versus a 18.06% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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