The stock market has been under immense pressure lately due to multi-decade high inflation, the Fed’s hawkish stance, and other macroeconomic headwinds. Moreover, the anticipated aggressive rate hikes are raising recessionary concerns. The S&P 500 index has plunged 18.2% year-to-date, while the NASDAQ Composite and Dow Jones have declined 25.6% and 13.8%, respectively.
However, the ongoing bear market is creating opportunities for long-term investors as several well-known stocks are trading at discounted prices. So, investing in these stocks will ensure impressive, market-beating returns in the long run.
During periods of overall market weakness, investors tend to rely on blue-chip stocks to hedge their portfolios. Blue-chip companies are prominent and stable industry leaders with solid financials, healthy cash flows, impressive growth records, and growing dividends. They tend to perform well during an economic downturn, given their fundamental strength.
Most held blue-chip stocks Apple Inc. (AAPL), Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), Amazon.com, Inc. (AMZN), and Tesla, Inc. (TSLA) are well-positioned to weather the current market downturns. So, we think adding these quality stocks to your watchlist could be wise.
Apple Inc. (AAPL)
AAPL needs no introduction; it is a leading manufacturer of smartphones, personal computers, tablets, and accessories worldwide. In addition, the company offers various related services. It has a $2.38 trillion market cap.
Last month, AAPL introduced new tools, technologies, and APIs. “With powerful new APIs for widgets on the Lock Screen, new services like WeatherKit, the availability of Xcode Cloud to help every Apple developer build apps faster, and new gaming capabilities with Metal 3, developers have more tools than ever to create app experiences,” said Susan Prescott, AAPL’s Vice President of Worldwide Developer Relations and Enterprise and Education Marketing.
In the same month, AAPL unveiled the M2 chip, beginning the next generation of Apple silicon designed especially for the Mac. M2 is built using second-generation 5-nanometer technology. It takes the industry-leading performance per watt of M1 even further with an 18% faster CPU, a 35% more powerful GPU, and a 40% faster Neutral Engine.
Also, it offers higher memory bandwidth and new capabilities, including ProRes acceleration. The recent launch might boost the company’s growth and revenue streams.
In the fiscal 2022 second quarter ended March 26, 2022, AAPL's net sales increased 8.6% year-over-year to $97.28 billion. Its operating income grew 9% year-over-year to $29.98 billion. In addition, the company's net income and earnings per share came in at $25.01 billion and $1.52, registering increases of 5.8% and 8.6%, respectively, from the prior-year period.
The $393.75 billion consensus revenue estimate for fiscal 2022, ending September 2022, represents a 7.6% improvement from the prior year. Analysts expect AAPL’s EPS for the current year to increase 9.5% year-over-year to $6.14. The company has topped the consensus revenue in three of the trailing four quarters, and the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 2.7% over the past year to close the last trading session at $147.04.
Microsoft Corporation (MSFT)
MSFT is a leading American multinational technology company that develops, licenses, and markets computer software, services, electronic devices, and solutions worldwide. The company operates through three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing. The company has a market capitalization of $2 trillion.
On June 16, MSFT announced Microsoft Viva Sales, a new seller experience application. Viva Sales works with any seller’s CRM to automate data entry and brings AI-powered intelligence to sellers in Microsoft 365 and Microsoft Teams. This will allow sellers to personalize their customer engagements more seamlessly toward faster deal closure. This new offering might boost the company’s revenues.
On June 8, MSFT and The Procter & Gamble Company (PG) entered a new multi-year collaboration that will leverage the Microsoft Cloud to accelerate and expand PG’s digital manufacturing platform and leverage the Industrial Internet of Things (IIoT) to bring products to consumers faster, increase customer satisfaction, and improve productivity. This partnership is expected to boost MSFT’s profitability and business growth.
MSFT’s revenue increased 18.4% year-over-year to $49.36 billion, and its gross margin grew 17.7% year-over-year to $33.75 billion in the fiscal 2022 third quarter ended March 31, 2022. Its operating income improved 19.5% from the prior-year period to $20.36 billion. The company’s net income and EPS came in at $16.73 billion and $2.22, up 8.2% and 9.4%, respectively, year-over-year.
The consensus revenue estimate of $198.62 billion for its fiscal year 2022 (ending June 2022) represents a growth of 18.2% from the previous year. The consensus EPS estimate of $9.37 for the ongoing year indicates a 17.5% year-over-year rise. It’s no surprise that MSFT has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has declined marginally over the past month to close the last trading session at $267.66.
Alphabet Inc. (GOOGL)
The tech behemoth offers its services in the U.S., Europe, Canada, Latin America, the Middle East, and Asia-Pacific. The company operates through three segments: Google Services; Google Cloud; and Other Bets. The company has a market capitalization of $1.58 trillion.
This May, GOOGL and Blackberry Limited (BB) launched Chrome Enterprise Management with BlackBerry UEM, offering the full suite of Unified Endpoint Management (UEM) support for devices running the Google Chrome OS and Chrome browser in enterprises. It is expected to extend the company’s market reach and boost profitability.
In March, GOOGL signed a definitive agreement to acquire Mandiant, Inc., a leading company in dynamic cyber defense and response, for $23.00 per share, in an all-cash transaction valued at $5.4 billion. Mandiant will join Google Cloud upon the close of the acquisition. With its addition, Google Cloud might deliver its end-to-end security operations suite with enhanced capabilities to customers.
For the fiscal 2022 first quarter ended March 31, 2022, GOOGL's revenues increased 23% year-over-year to $68.01 billion. The company’s income from operations grew 22.2% from the year-ago value to $20.09 billion. Its net cash provided by operating activities amounted to $25.11 billion, up 30.2% year-over-year.
Analysts expect GOOGL's revenue for the fiscal 2022 fourth quarter (ending December 2022) to come in at $84.45 billion, representing a 12.1% rise year-over-year. Also, Street expects the company's EPS for the same quarter to come in at $31.50, representing a 2.7% increase from the prior-year period. Furthermore, the company has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained marginally over the past month to close the last trading session at $2,387.07
Amazon.com, Inc. (AMZN)
The retail giant AMZN offers a wide range of products and services to customers in North America and internationally. The company operates through three segments: North America; International; and Amazon Web Services (AWS). AMZN has a market capitalization of 1.18 trillion.
On June 8, AMZN’s Amazon Web Services (AWS) announced the general availability of AWS Mainframe Modernization. This new service makes it faster and easier for customers to modernize mainframe workloads by moving them to the cloud and benefitting from the elasticity, superior agility, and cost savings of AWS.
Tata Consultancy Services Ltd. (TCS), Infosys Ltd. (INFY), and CGI Inc. (GIB) are among the customers and partners using AWS Mainframe Modernization. The new offering might expand the company’s reach and boost its revenue streams.
On May 24, AMZN announced the general availability of Amazon Elastic Compute Cloud (Amazon EC2) C7g instances. The new C7g instances powered by next-generation AWS Graviton3 processors provide up to 25% better performance than instances powered by Graviton2 processors for running compute-intensive applications on AWS. The new service offering might boost the company’s profitability.
AMZN's net sales increased 7.3% year-over-year to $116.44 billion, while its net service sales grew 17.6% year-over-year to $59.98 billion in the fiscal 2022 first quarter ended March 31, 2022. Its net other income was valued at $8.69 billion for the first quarter. The company’s net cash provided by investing activities and net cash provided by financing activities came in at $906 million and $1.99 billion, respectively.
Analysts expect AMZN's revenue for the fiscal 2022 third quarter (ending September 2022) to come in at $129.38 billion, representing a 16.8% rise from the same period in 2021. Also, Street expects the company's EPS for the next quarter to come in at $0.40, representing a growth of 31.1% year-over-year.
The stock has declined 4.7% over the past month and 30.7% year-to-date. It closed the last trading session at $115.54.
Tesla, Inc. (TSLA)
TSLA is a leading EV player, designing, manufacturing, and selling electric vehicles (EVs) and energy generation and storage systems in the United States and internationally. The company operates through two segments: Automotive; and Energy Generation and Storage. It has a market capitalization of $779.67 billion.
In the second quarter, TSLA produced 258,000 vehicles and delivered over 254,000 vehicles. June 2022 was the highest vehicle production month in the company’s history. The vehicle deliveries reflect the company’s strong financial performance.
In the fiscal 2022 first quarter ended March 31, 2022, TSLA's revenues increased 80.5% year-over-year to $18.76 billion, and its gross profit rose 146.5% from the year-ago value to $5.46 billion. Its income from operations grew 506.6% year-over-year to $3.60 billion. TSLA’s adjusted EBITDA came in at $5.02 billion, up 172.8% year-over-year.
Furthermore, the company's non-GAAP net income attributable to common stockholders and non-GAAP EPS attributable to common shareholders stood at $3.74 billion and $3.22, registering a growth of 255.1% and 246.2%, respectively, year-over-year.
The consensus revenue estimate of $17.17 billion for the fiscal 2022 second quarter ended June 2022 represents an increase of 43.6% from the prior-year period. The $1.88 consensus EPS estimate for the to-be-reported quarter indicates a 29.8% year-over-year rise. Also, it has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 3.7% over the past month and closed the last trading session at $752.29.
AAPL shares were trading at $146.08 per share on Monday morning, down $0.96 (-0.65%). Year-to-date, AAPL has declined -17.51%, versus a -18.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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