The benchmark indexes have experienced a broad sell-off since the beginning of 2022 due to the Fed’s aggressive interest rate hikes to curb soaring inflation, geopolitical conflicts between Russia and Ukraine, and major supply chain bottlenecks. However, with the October CPI report coming in lower than expected, the major indices staged their biggest rally since 2020.
The Dow Jones Industrial Average jumped 3.7% to 33,715.37, marking its biggest one-day gain since the market emerged from the pandemic. The S&P 500 jumped 5.5%, while the Nasdaq Composite surged 7.4%.
Additionally, the October jobs report also marked the slowest pace of job gains since December 2020. Employers added only 261,000 jobs for the month, while the unemployment rate moved higher to 3.7%. The job report is raising hopes of a slower pace of Federal rate hikes ahead.
The Dow Jones Industrial Average tracks 30 of the most traded stocks on the New York Stock Exchange (NYSE) and the Nasdaq. And we think it could be the right time to invest in Dow stocks Microsoft Corporation (MSFT), UnitedHealth Group Incorporated (UNH), and Amgen Inc. (AMGN).
Microsoft Corporation (MSFT)
MSFT, the global tech behemoth, develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates through three segments- Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On October 20, MSFT and UBS Group AG (UBS) announced a landmark expansion of their partnership to accelerate UBS’s public cloud footprint over the next five years. Through this partnership, UBS plans to run more than 50% of its applications on Microsoft Azure, its primary cloud platform now. This should be strategically beneficial for MSFT.
MSFT’s $2.72 annual dividend yields 1.12% at its current share price. The company declared its latest quarterly dividend of $0.68 on September 20, payable on December 8, 2022. Its dividend payouts have increased at a 10.5% CAGR over the past three years and a 9.7% CAGR over the past five years. MSFT has a record of 17 consecutive years of dividend growth.
For the fiscal 2023 first quarter ended September 30, MSFT’s total revenue increased 10.6% year-over-year to $50.12 billion, while its operating income grew 6.3% from the year-ago value to $21.52 billion.
Analysts expect MSFT’s revenue for the fiscal year ending June 2023 to come in at $212.96 billion, representing an increase of 7.4% year-over-year. Its EPS is expected to increase 3.5% year-over-year to $9.53 in the same period. The company has an impressive earnings surprise history since it surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of MSFT have gained 6% over the past month to close the last trading session at $242.98.
MSFT’s POWR Ratings reflect its promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its weighting.
The stock also has a B grade for Stability and Quality. Within the Software – Business industry, it is ranked #9 of 54 stocks.
Click here to get MSFT’s additional POWR Ratings for Growth, Value, Sentiment, and Momentum.
UnitedHealth Group Incorporated (UNH)
UNH operates as a diversified healthcare company in the United States through four segments- UnitedHealthcare; OptumHealth; OptumInsight; and OptumRx.
On October 27, UNH announced the expansion of its 2023 Individual and Family Plans in the Health Insurance Marketplace. The company aims to offer affordable benefits and services across 22 states. This should bolster the company’s revenue streams.
UNH’s $6.60 annual dividend yields 1.21% at its current share price. The company is expected to pay a quarterly dividend of $1.65 per share on December 13, 2022. Over the last three years, UNH’s dividend payouts have grown at a 16.1% CAGR and 17.7% CAGR over the past five years. It has a record of 12 consecutive years of dividend growth.
The company’s total revenues increased 11.8% year-over-year to $80.89 billion for the fiscal third quarter that ended September 30, 2022. Adjusted net earnings attributable to UNH common shareholders increased 27.2% year-over-year to $5.49 billion, while its adjusted EPS came in at $5.79, representing a 28.1% increase from the prior-year quarter.
UNH’s EPS and revenue for the quarter ending December 2022 are expected to increase 16% and 11.1% year-over-year to $5.20 and $81.93 billion, respectively. The company also beat the consensus EPS estimates in each of the trailing four quarters, which is commendable.
Over the past year, the stock has gained 18.3% to close the last trading session at $544.17. It gained 111.8% over the past three years.
It is no surprise that UNH has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock is graded B for Growth, Stability, Sentiment, and Quality. Out of the 11 stocks in the A-rated Medical – Health Insurance industry, UNH is ranked #3.
Click here to see UNH's additional ratings for Value and Momentum.
Amgen Inc. (AMGN)
AMGN discovers, manufactures, and delivers human therapeutics worldwide. Its flagship drugs include red blood cell boosters Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and Enbrel and Otezla for inflammatory diseases. The company distributes its products through pharmaceutical wholesale distributors and direct-to-consumer channels.
On October 20, AMGN announced the successful completion of its acquisition of ChemoCentryx, Inc. (CCXI), a biopharmaceutical company focused on orally-administered therapeutics to treat autoimmune diseases, inflammatory disorders, and cancer, for $52 per share in cash, representing a total merger consideration of approximately $3.7 billion. This acquisition should bolster AMGN’s capabilities.
AMGN’s $7.76 annual dividend yields 2.67% at its current share price. AMGN’s dividend payouts have grown at a 10.2% CAGR over the past three years and 11.2% CAGR over the past five years. It has a record of 10 consecutive years of dividend growth. Moreover, on October 28, AMGN declared a $1.94 per share dividend, payable on December 8, 2022.
AMGN’s non-GAAP operating income rose 7.4% year-over-year to $3.28 billion for the fiscal third quarter that ended September 30, 2022. Its non-GAAP net income increased 8.9% year-over-year to $2.53 billion, while its non-GAAP EPS grew 15.2% year-over-year to $4.70.
Analysts expect AMGN’s revenue to increase 4% year-over-year to $6.49 billion in the fiscal first quarter ending March 2023. Its EPS is expected to increase 5.9% year-over-year to $4.50 in the same quarter. Additionally, it surpassed EPS estimates in all four trailing quarters, which is impressive.
Over the past year, the stock has gained 36.5% and 29.4% year-to-date to close the last trading session at $291.01.
The company has an overall rating of B, which translates to a Buy in our proprietary rating system.
AMGN has an A grade for Quality. Within the 381-stock Biotech industry, it is ranked #10.
Beyond what is stated above, we’ve also rated AMGN for Sentiment, Growth, Momentum, Value, and Stability. Get all AMGN ratings here.
MSFT shares were trading at $247.38 per share on Friday afternoon, up $4.40 (+1.81%). Year-to-date, MSFT has declined -25.96%, versus a -15.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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