As markets trade sharply lower in 2022 amid hot inflation, recession risks and big Fed rate hikes, Chevron (CVX), Merck (MRK), Amgen (AMGN), Travelers Cos. (TRV) and Coca-Cola (KO) have emerged as the five best Dow Jones stocks so far this year.
Taken together, the stocks have benefited from rising oil prices, advancements in drug developments, and efforts by investors to seek stability, as concerns over rising prices rattle the major indexes.
All of these stocks have Composite Ratings in the 90s. But with the market prone to slip into correction territory, investors may want to tread lightly.
Chevron stock is up 24% year to date, making it the best of the best Dow Jones stocks so far this year. That’s despite CVX stock being down 21% from its mid-June peak, as crude oil and gasoline prices retreated from highs. Shares of the oil producer were down 2.2% to 143.72 in the stock market today. The stock has tried to break out from a flat base with a 174.86 buy point. But that breakout fizzled earlier this month.
Chevron, like much of the oil industry, has gained on rising oil prices, which were drive higher by Russia’s invasion of Ukraine. The company said its U.S. oil and gas production was up 10% during the first quarter. Its “unconventional production” in the Permian Basin — its segment that deals with horizontal drilling and fracking — hit record levels during the first quarter.
Still, the U.S. oil industry has been reluctant to produce too much, out of fear prices will fall as it ramps up drilling. Chevron CEO Michael Wirth, at a conference this month, signaled caution, saying “the way you survive and thrive is not to believe the good times will last forever.”
“It’s hard to predict exactly where prices will go,” he said. “Certainly, in the near term, there’s a lot of upward pressure on the market. Longer term, economies struggle with sustained high energy prices. It’s tough. And so, I don’t think this persists for years, at least at the levels that we’re likely to see this summer.”
Merck stock is up around 20% so far this year. Shares of the drugmaker were down 1.1% to 91.47 on Thursday. MRK stock has a 95.02 flat-base buy point.
Shares of the company hit a new high this month, after EU regulators recommended approval for its cancer drug Lynparza for post-chemotherapy treatment in patients with an early form of breast cancer. The European Commission also approved another drug, Keytruda, as a treatment, after therapy, for a type of melanoma in people as young as 12.
Elsewhere, the CDC also recently recommended Merck’s pneumonia vaccine for use for infants and children. The company also released promising results for its Covid pill.
Merck stock has a 99 Composite Rating and a 93 EPS Rating.
Amgen stock is up 8.5% so far this year. Shares of the biotech were down 1% on Thursday, and testing support at their 50-day line.
As with the others that made the cut for the best Dow Jones stocks this year, Amgen’s ratings are strong. The stock has a 92 Composite Rating. Its EPS Rating is 86.
Amgen stock got a big lift in February, after offering an upbeat sales and profit outlook for 2030, potentially putting sales above $35 billion. But shares have pulled back from April’s 52-week high.
In April, Amgen said it expected its sales to be roughly flat this year. However, first-quarter results, reported during that time, beat expectations, helped by its osteoporosis treatment Evenity and Aimovig, its migraine drug.
Travelers Cos. is up 8% so far this year. Shares of the property and casualty insurance giant were up 1.5% on Thursday, and finding support at their 200-day line. The stock was consolidating, but below its 50-day line.
Insurance stocks held up even as markets wobble. Such stocks are sometimes seen as defensive plays, given that people are likely to still need insurance regardless of the state of the economy. Rising interest rates have also helped net interest margins.
Still TRV stock is down 10% since late March
During Travelers’ earnings conference call in April, it noted that most of its business is in the U.S., helping to shield it from risks around the world. But CEO Alan Schnitzer noted that estimating loss costs was harder than ever, given increasingly harsh weather, Russia’s war in Ukraine and the world turns away from globalization.
“In terms of the economic outlook, if the economy continues to grow, we’ll benefit from higher insured exposures, as you’ve seen in our results over the past few quarters,” he said then. “If we head into a recession, we’re very well-positioned having made significant progress in improving productivity and efficiency in recent years.”
Coca-Cola stock was up 6% so far this year. Shares rose 0.3% to 62.91 on Thursday. The stock was in a flat base with a 67.30 buy point.
Shares of the beverage company have been helped by acquisitions and a rebound from the pandemic, Cowen analysts say.
Manuel Arroyo, the company’s chief marketing officer, during a recent conference pointed to other trends, such as health and wellness, along with demand for energy drinks. But CFO John Murphy said that as prices rise, consumers have been “pretty resilient,” after saving money during lockdown.
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