Kalkine Media lists blue-chip stocks to watch amid economic challenges

Highlights:

• The worldwide sales of Merck & Company, Inc. (NYSE:MRK) rose 14 per cent YoY in Q3 FY22.
• Caterpillar (NYSE:CAT) stock rose around 32 per cent in the fourth quarter through November 2.
• Boeing Company (NYSE:BA) reported a four per cent revenue growth in Q3 FY22.

Blue-chip stocks are companies that are generally well-established and have a stable business model. Investors typically look for opportunities in the sector during economic challenges due to their stable operating models compared to some other firms.

In addition, some blue-chip companies also pay a dividend to the investors, which makes it attractive to some, though there is no definite rule for that. Besides, the volatility is comparatively lower in these stocks than in their smaller siblings or the speculative stocks.

Some prominent names include Merck & Company, Inc. (NYSE: MRK), Starbucks Corporation (NASDAQ:SBUX), Caterpillar, Inc. (NYSE: CAT), Verizon Communications Inc. (NYSE: VZ), and Boeing Company (NYSE: BA).

Given the recent uncertainties in the market, some investors are keeping close track of these blue-chip stocks. Although the sector also came under notable pressures this year due to soaring prices, geopolitical woes, and rising policy rates.

So, let's explore these companies' recent stock performance and operating highlights for cues on how they have tackled the macroeconomic headwinds so far.

Merck & Company, Inc. (NYSE:MRK)

The leading Kenilworth, New Jersey-based pharmaceutical firm, Merck & Company, holds a dividend yield of 2.73 per cent. The global healthcare firm provides various health solutions through its medicines, vaccines, and other related segments.

The company's stock rose over 30 per cent YTD and 12 per cent YoY. In the ongoing quarter through Wednesday, November 2, the MRK stock rose over 16 per cent and touched its 52-week high of US$ 101.5 on October 27, 2022, following its earnings release.

According to its Q3 FY22 financial results, the pharmaceutical firm's worldwide sales rose 14 per cent YoY to US$ 15 billion, while its GAAP net income fell 29 per cent YoY to US$ 3.24 billion.

Merck raised its annual sales guidance to be between US$ 58.5 billion and US$ 59 billion, reflecting a surge of 20 per cent and 21 per cent YoY. However, it has lowered its GAAP EPS guidance to be between US$ 5.68 and US$ 5.73 for the year.

Starbucks Corporation (NASDAQ:SBUX)

The major coffeehouses and roastery reserves chain operator, Starbucks Corporation, has a dividend yield of 2.26 per cent. Besides the US, the company operates in several global markets.

The Washington-based coffeehouses chain operator's stock fell over 25 per cent YTD and 21 per cent YoY. Looking at the ongoing quarter's performance through Wednesday, November 2, the SBUX stock jumped over three per cent.

The company is said to have around 35,000 stores globally. Meanwhile, it will be reporting its annual and final quarter of fiscal 2022 financial results on Friday, December 2.

In Q3 FY22, Starbucks Corporation's revenue rose nine per cent YoY to US$ 8.2 billion, and its GAAP EPS was US$ 0.79, against US$ 0.97 per share in the year-ago quarter.

Caterpillar, Inc. (NYSE:CAT)

The industrial firm Caterpillar Inc's dividend yield was 2.22 per cent during writing, and it is one of the leading manufacturers of instruments used in construction.

The stock of the construction machinery equipment producer was up over five per cent YTD and around the equal percentage on an annual basis.

Meanwhile, the CAT stock gained over 32 per cent in the fourth quarter through Wednesday, November 2.

The company released its latest quarter financial results on October 27, which showed that its revenue was up 21 per cent YoY to US$ 15 billion, and its EPS was US$ 3.87, against US$ 2.60 in Q3 FY21.

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Verizon Communications Inc. (NYSE:VZ)

The New York-based telecommunication conglomerate firm, Verizon 'Communications' dividend yield was 6.98 per cent at the time of writing. The company's stock, which provides wireless network connections like internet, phone services, etc. fell over 27 per cent YTD and nearly 28 per cent YoY.

It traded flat in the fourth quarter through November 2 while touching its one-year low of US$ 34.55 on October 21, 2022.

The company's Q3 FY22 earnings release from October 21 showed that its revenue soared four per cent YoY to US$ 34.2 billion, and its EPS was US$ 1.17 per share versus US$ 1.55 apiece in Q3 FY21.

Verizon now expects its wireless service revenue to increase between 8.5 per cent and 9.5 per cent YoY in fiscal 2022.

Boeing Company (NYSE:BA)

The leading aerospace company, Boeing Company's stock was up over six per cent in the intraday trading on November 2. Meanwhile, the stock of the aerospace firm that focuses on designing and manufacturing airplanes, rotorcraft, etc., fell over 26 per cent YTD and 30 per cent YoY.

In the fourth quarter, the BA stock had risen over 22 per cent at the time of writing. The Arlington-based airplane manufacturer's Q3 FY22 revenue jumped four per cent YoY to US$ 15.95 billion, and its loss per share totaled US$ 5.49, against US$ 0.19 per share in Q3 FY21.

Bottom line:

The Federal Reserve increased interest rates by 0.75 per cent again on Wednesday and declared that the fight against inflation will necessitate further increases in borrowing costs, but it also hinted that it might be nearing an inflection point in what has become the fastest tightening of US monetary policy in 40 years.

The recent GDP data came as a surprise, however, the Federal Reserve increased the interest rates. The data had showed that the US economy advanced 2.6 per cent in Q3, following two consecutive quarters of decline.

October was comparatively better for the stocks, while the three major indices notched gains. The S&P 500 and Nasdaq index attained single-digit gains in the month, while the blue-chip index, Dow Jones, jumped around 14 per cent.

This marks the best monthly percentage gain of the index since 1976. However, despite the strong gains, the index remained nine per cent down YoY while declining over 10 per cent through the year.

The gains were mostly due to hopes that the policymakers would ease their aggressive campaigns to bring down inflation. But the recent economy, which was stronger-than-anticipated, seemed to have dented the optimism this week.

So, it is evident that the blue-chip stocks were also no exception amid the highly volatile trading in the broader market. So, investors should carefully evaluate the risks and diversify their portfolio, to distribute the risks accordingly.