In times of market uncertainty, blue-chip stocks stand out for their stability, value and diversification, protecting investments from downturns while demonstrating strong market leadership and resilience. Offering consistent growth, reliable dividends and stable income, blue-chip stocks are a smart choice for investors seeking safety and performance.
With this in mind, investors might consider buying fundamentally strong blue-chip stocks such as Lockheed Martin Corporation (LMT), Regeneron Pharmaceuticals, Inc. (REGN), and The Cigna Group (CI), which have Strong Buy ratings in our proprietary POWR Ratings system.
The US economy is experiencing moderate growth despite global uncertainties and currency fluctuations. The IMF forecasts global growth of 3.5% this year, while a stronger dollar is hurting US net exports. In addition, inflation fell to 2.9% in July, the lowest since 2021, although core inflation rose to 3.2%.
In addition, the Fed’s expected rate cut in September could boost investment. Despite market volatility and recession concerns due to weak labor market data and a rising unemployment rate of 4.3%, the overall economic outlook remains cautiously optimistic. This makes blue-chip stocks a solid investment option, offering stability and potential growth in uncertain times.
Considering these favorable trends, let us analyze the fundamental aspects of the three blue-chip picks.
Lockheed Martin Corporation (LMT)
LMT is a security and aerospace company engaged in the research, design, development, manufacture, integration and maintenance of technology systems, products and services worldwide. The company operates in the business areas of aerospace, missile and fire control systems, rotary and mission systems and space.
On August 13, 2024, LMT and General Dynamics announced a strategic cooperation agreement to produce solid rocket motors to improve the resilience and security of the domestic supply chain. The initial focus will be on motors for the Guided Multiple Launch Rocket System (GMLRS), with production scheduled to begin in 2025.
On 9 August 2024, LMT delivered the first of five C-130J Super Hercules aircraft to New Zealand, expanding its tactical airlift capabilities. This delivery marks the beginning of a new era for the Royal New Zealand Air Force, which will modernise its fleet with these modern aircraft.
In terms of trailing 12-month net profit margin, LMT is 9.48%, 53.1% higher than the industry average of 6.19%. Trailing 12-month return on total assets of 21.42% is 201.6% higher than the industry average of 7.10%. Also, trailing 12-month asset turnover ratio of 1.27x is 62.8% higher than the industry average of 0.78x.
LMT’s net revenue increased 8.6% year-over-year to $18.12 billion for the second fiscal quarter ended June 30, 2024. Similarly, its aviation net revenue increased 5.8% year-over-year to $7.28 billion. In the same quarter, the company’s non-GAAP net income was $1.70 billion, while non-GAAP earnings per share was $7.11, representing a 5.6% year-over-year increase.
For the quarter ending September 30, 2024, LMT’s revenue is expected to increase 3.7% year-over-year to $17.51 billion. Earnings per share for the quarter ending March 31, 2025 are expected to increase 4.7% to $6.63. It has beaten consensus earnings per share estimates in each of the last four quarters. LMT stock has gained 31.8% over the past six months, closing the last trading session at $562.34.
LMT’s POWR Ratings reflect a strong outlook. The overall rating is A, which equates to a strong buy in our proprietary ratings system. POWR Ratings evaluate stocks based on 118 different factors, each with its own weighting.
It has a grade of B for Momentum, Stability, Sentiment and Quality. It ranks first among 70 stocks in the Aerospace/Defense Services industry. In addition to what we have provided above, we have also rated LMT for Growth and Value. You can find all of LMT’s ratings here.
Regeneron Pharmaceuticals, Inc. (RAIN)
REGN discovers, invents, develops, manufactures and markets drugs to treat various diseases worldwide. The company’s products include EYLEA injection, Dupixent injection, Libtayo injection, Praluent injection, REGEN-COV for COVID-19 and Kevzara solution.
On July 3, 2024, REGN and Sanofi announced that Dupixent received the first EU approval for the treatment of uncontrolled COPD with elevated blood eosinophils, representing a major advance in COPD therapy.
On June 11, 2024, RGN and Sanofi announced FDA approval of Kevzara (sarilumab) for the treatment of active polyarticular juvenile idiopathic arthritis (pJIA) in patients weighing 63 kg or more. This approval provides a new treatment option for pediatric patients and expands the use of Kevzara in the treatment of chronic inflammatory diseases.
In terms of the FCF margin for the last 12 months, REGN is at 15.50%, well above the industry average of 1.26%. Likewise, the EBIT margin for the last 12 months is at 30.14%, well above the industry average of 2.32%. In addition, the Capex/Sales ratio for the last 12 months is at 5.50%, 64% above the industry average of 3.35%.
For the second fiscal quarter ended June 30, 2024, REGN’s revenues were $3.55 billion, an increase of 12.3% year over year. The company’s non-GAAP net income increased 14.3% year over year to $1.35 billion, while non-GAAP net income per share increased 12.9% year over year to $11.56.
Street expects REGN’s earnings per share and revenue for the quarter ending Sept. 30, 2024, to rise 1.6% and 8.7% year-over-year, to $11.77 billion and $3.65 billion, respectively. It has beaten Street EPS estimates in three of the last four quarters. Over the past nine months, the stock has gained 44.4%, closing the last trading session at $1,151.35.
It’s no surprise that REGN has an overall rating of A, which equates to a Strong Buy in our proprietary POWR Ratings system.
REGN has a B grade for Value, Stability, Sentiment and Quality. Within the Biotech industry, it is ranked 7th out of 337 stocks. Click here to see REGN’s other ratings for Growth and Momentum.
The Cigna Group (CI)
CI provides insurance and related services. The company operates through its Evernorth Health Services and Cigna Healthcare divisions. The company also offers permanent insurance contracts to finance employer-sponsored benefits.
In terms of the EBIT margin for the last 12 months, CI is 3.51%, which is 51.14% higher than the industry average of 2.32%. The asset turnover ratio of 1.41 is 244.1% higher than the industry average of 0.41.
CI’s adjusted revenue for the second quarter ended June 30, 2024, increased 24.4% year-over-year to $60.47 billion. Adjusted operating income increased 4.9%, or 9.6% year-over-year, to $1.91 billion, or $6.72 per share. In addition, the company’s pharmacy revenue was $45.10 billion, up 32.8% from the year-ago quarter.
Analysts expect CI’s revenue for the quarter ending September 30, 2024, to grow 21.4% year-over-year to $59.56 billion. Earnings per share for the same quarter are expected to grow 9.4% year-over-year to $7.41. In each of the last four quarters, it has beaten Wall Street’s EPS estimates. Over the past year, CI’s stock has gained 15.8%, closing the last trading session at $335.16.
CI’s POWR Ratings reflect a strong outlook, with an overall rating of A, which equates to a Strong Buy in our proprietary scoring system.
It has grades of B for Growth, Value and Quality. It is ranked 2 out of 10 stocks in the A-rated Health Insurance industry. Click here to see CI’s Momentum, Stability and Sentiment ratings.
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LMT shares were unchanged in after-hours trading on Wednesday. Year-to-date, LMT has gained 26.02%, while the benchmark S&P 500 index has gained 15.12% over the same period.
About the author: Abhishek Bhuyan
Abhishek started his professional career as a financial journalist due to his keen interest in identifying the fundamental factors that influence the future performance of financial instruments. More…
