5 S&P 500 stocks to watch amid uncertainty in US midterm polls

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 5 S&P 500 stocks to watch amid uncertainty in US midterm polls
Image source: © Panteleev83 | Megapixl.com

Highlights:

  • Constellation Energy narrowed its adjusted EBITDA guidance for fiscal 2022.
  • The pharmaceutical segment profit of Cardinal Health rose six per cent YoY in Q1 FY23.
  • Net sales of Albemarle Corporation jumped 152 per cent YoY in Q3 FY22.

The stock market witnessed a rough journey so far in 2022, due to macroeconomic headwinds like soaring prices, increasing borrowing costs, and other related concerns. However, with the midterm polls in the interim, investors are also keeping a watch on both, the equity market and the election trends.

The observers, who are still anticipating that the Republicans would gain momentum in the polls, are expecting that such results would bring some roadblocks to Democratic spending and policies in the coming days. In addition, they are also anticipating that such results would result in an aggressive battle over increasing the US debt ceiling in the upcoming fiscal year.

Considering the recent election trends, the Republicans are in a favorable position to gain control of the House of Representatives, while the Senate fight is neck to neck for both parties.

Although the red-wave anticipation seems to be diminishing by the recent trends, still some observers are expecting Republican gains in the House of Representatives.

However, even if the Republicans attain a victory in the midterm polls, US President Joe Biden would stay in the White House for the remaining two years of his tenure with his veto power, which would lead to a split government.

Historically, a split government was accompanied by a period of positive performance in the equity market. Now, if the Republicans had a victory in the House, considering the recent trends, the results for the now-Democrat-controlled Senate remained uncertain.

The economic challenges, accompanied by geopolitical turmoil, were behind the dominant forces on the market movements this year. An upward movement by the GOP would likely ease some concerns of the market participants, about the higher fiscal spending by the federal government, which some analysts believe is contributing to the stubbornly high inflation.

Now, as some investors are hoping for a positive market performance after the midterm polls, let's explore five S&P 500 stocks- Constellation Energy Corporation (NASDAQ: CEG), Cardinal Health, Inc. (NYSE: CAH), Northrop Grumman Corporation (NYSE: NOC), Albemarle Corporation (NYSE: ALB), and Quanta Services, Inc. (NYSE: PWR):

Constellation Energy Corporation (NASDAQ: CEG)

Constellation Energy Corporation is a utility holding company, which offers electricity, solar power, and natural gas to its clients. Besides, the utility firm also provides energy management solutions. Constellation Energy Corporation's dividend yield was 0.6 per cent at the time of writing.

Meanwhile, the CEG stock added over five per cent through the running quarter, while hitting its 52-week high of US$ 96.29 on November 2, 2022. Constellation Energy Corporation incurred a GAAP net loss of US$ 188 million in Q3 FY22, versus an income of US$ 607 million in Q3 FY21.

Meanwhile, the utility holding firm narrowed its annual adjusted EBITDA guidance range to be between US$ 2.45 billion and US$ 2.65 billion, from its prior outlook of US$ 2.35 billion to US$ 2.75 billion.

Cardinal Health, Inc. (NYSE: CAH)

The American multinational healthcare firm, Cardinal Health's dividend yield was 2.45 per cent, and its stock was up over one per cent during the pre-market session on Wednesday, November 9. The company is working toward reducing costs while improving the efficacy of healthcare services for patients.

On November 8, the company's board approved a quarterly dividend of US$ 0.4957 per share out of the firm's capital surplus. The dividend would be paid to the investors on January 15, next year.

In the starting quarter of fiscal 2023, Cardinal Health's revenue soared 13 per cent YoY to US$ 49.6 billion, and its attributable net income fell 59 per cent YoY to US$ 110 million.

Its revenue from the pharmaceutical segment rose 15 per cent YoY to US$ 45.8 billion in Q1 FY23, and the segment's profit was US$ 431 million, up six per cent YoY.

Northrop Grumman Corporation (NYSE: NOC)

The aerospace and defense technology company, Northrop Grumman specializes in manufacturing weapons and military technologies. The dividend yield of the Falls Church-based aerospace and defense firm was 1.29 per cent.

The US$ 82.18 billion market cap company said that its Integrated Battle Command System or IBCS completed the final assessment during its recent Operational Test and Evaluation.

Northrop Grumman Corporation's sales were up three per cent YoY to US$ 8.97 billion in Q3 FY22, and its diluted earnings fell 11 per cent YoY to US$ 5.89 apiece in the quarter.

Albemarle Corporation (NYSE: ALB)

The specialty chemicals manufacturing firm, Albemarle Corporation's dividend yield was 0.55 per cent. The company claims to have a leading position in lithium, bromine, and other related segments.

The company's subsidiary, Albemarle Lithium UK Limited completed the acquisition of Guangxi Tianyuan New Energy Materials Co., Ltd., it said on October 25. The acquisition was valued at about US$ 200 million.

On October 24, the Charlotte-based specialty chemicals firm announced a quarterly dividend of US$ 0.395 per share which is next payable on January 3, 2023. In Q3 FY22, Albemarle Corporation's sales rose 152 per cent YoY to US$ 2.1 billion, and its net income was US$ 897.2 million, against a loss of US$ 392.8 million in Q3 FY21.

The adjusted diluted EPS of the firm rose 614.3 per cent YoY to US$ 7.50 per share. Albemarle now expects its annual net sales to be between US$ 7.1 billion and US$ 7.4 billion, and its adjusted EBITDA margin to be between 46 per cent and 47 per cent.

Recent performance of five S&P 500 stocksSource: ©Kalkine Media®; © Canva via Canva.com

Quanta Services, Inc. (NYSE: PWR)

The stocks of the construction engineering company, Quanta Services were flat in the pre-market trading on November 9. The company, which offers infrastructure services for electric power, pipeline, and other related services, holds a dividend yield of 0.19 per cent.

Quanta Services Inc's revenue in Q3 FY22 was US$ 4.46 billion, against US$ 3.35 billion in Q3 FY21. The shareholders' available net income totaled US$ 156 million in the latest quarter, relatively down from US$ 174.4 million in the preceding year's same quarter.

Bottom line:

The Republicans’ win over Congress is expected to freeze spending through the debt ceiling. Some analysts hope that it might also pad support to a rally in the Treasury bonds while helping in extending the recent gains in the stocks.

A gridlock political picture, which might come out because of a split government, is likely to act positively for the stocks' performance while diminishing certain uncertainties in the market.

The fiscal spending and tax reforms have weighed on the investors' sentiment so far, mainly due to ongoing inflationary pressures. In addition, the gridlock would also hinder some major democrat agendas, which might also help gains in the stocks.

Otherwise, the S&P 500 index, comprising the biggest 500 US publicly traded companies, fell about 19 per cent YoY and around 20 per cent YTD.

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