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It’s been a rough two months for the U.S. stock markets. All the major indexes have been in retreat. Between Sept 20 and Nov. 23, the S&P 500 dropped just over 10 per cent, entering official correction territory.

But while the broad market has pulled back, not all sectors have suffered equally. Some stocks have even gained ground, defying the sell-off.

Here are two stocks that I have recommended to readers of my Internet Wealth Builder newsletter that I recently reviewed. My conclusion: both are still a buy, despite the current market turbulence. Here are the details.

Walgreens Boots Alliance (WBA-Q)

Background: Walgreens Boots is the dominant player in the retail pharmaceutical sector in the U.S. and Europe. With its associated companies, it has a presence in 25 countries and employs more than 385,000 people. The company has one of the largest global pharmaceutical wholesale and distribution networks, with more than 390 distribution centers delivering to more than 230,000 pharmacies, doctors, health centers, and hospitals each year. In addition, Walgreens Boots Alliance is one of the world’s largest purchasers of prescription drugs and many other health and wellbeing products. In June, the company became part of the Dow Jones Industrial Average, replacing General Electric.

Performance: The shares took a brief dip in mid-month but then rallied. They are currently trading at 10.8 per cent above the price on Oct. 1.

Recent developments: The company reported fourth-quarter and year-end 2018 financial results on Oct. 11. Sales for the quarter came in at US$33.4-billion, which was slightly below expectations. However, adjusted net earnings per share beat projections, coming in at US$1.4-billion, up 4.5 per cent. Adjusted earnings per share were US$1.48, up 13 per cent compared with the same quarter a year ago.

For the full fiscal year, sales increased 11.3 per cent to US$131.5-billion. On a constant currency basis, the increase was 10 per cent. Adjusted net earnings were up 8.8 per cent to US$6-billion (8 per cent on a constant currency basis). Adjusted earnings per share increased 18 per cent to US$6.02.

The company issued 2019 guidance of 7 per cent to 12 per cent in estimated growth in adjusted earnings per share, at constant currency rates. The guidance assumes current exchange rates for the rest of the fiscal year and results in an adjusted EPS range of US$6.40 to US$6.70 for fiscal 2019.

CEO Stefano Pessina said the integration of the recently acquired Rite Aid stores is on track, “and our pharmacy market share in the U.S. increased year-over-year on an annual basis. We are making progress on our partnership strategy both in the U.S. and internationally, including our most recent announcements with LabCorp, Kroger and Alibaba, which will provide additional opportunities for future growth.”

Dividends and buybacks: The stock pays a quarterly dividend of 44 US cents per share (US$1.76 per year). It was raised by 10 per cent in August. Current yield is 2.2 per cent.

The company has a US$10-billion share repurchase program in place, which includes the expected repurchase of approximately $3 billion worth of shares in fiscal 2019.

Key metrics: The stock has a trailing p/e ratio of 16. The trailing 12-month earnings per share is US$5.05. The 12 month trading range is US$59.07-US$83.18.

Recommendation: I rate the stock as a buy. The shares closed on Nov. 23 at US$80.81.

JPMorgan Chase & Co. (JPM-N)

Background: JPMorgan Chase & Co. is a leading global financial services firm with assets of US$2.6-trillion and operations worldwide. The firm is a leader in investment banking, financial services, commercial banking, financial transaction processing, and asset management.

Performance: The stock traded as high as US$117.85 in September, then dropped to the US$103 range in late October before staging a modest rally. It closed on Nov. 23 at US$106.65.

Recent developments: The company released third-quarter results that beat analysts’ estimates, but the stock market just shrugged. Managed net revenue came in at US$27.8-billion, up 5 per cent from the same quarter of fiscal 2017. Net income revenue was US$14.1-billion, up 7 per cent, driven in large part by the impact of higher rates.

Net earnings were US$8.4-billion, a 24-per-cent increase from US$6.7-billion in 2017. On a per share basis, net earnings were US$2.34, a 33-per-cent improvement over last year’s US$1.76. The difference reflects a 4-per-cent decline in the number of shares outstanding as a result of the company’s stock buyback program.

CEO Jamie Dimon hailed the results but warned there could be trouble ahead and took a veiled shot at the Trump Administration’s policies.

“JPMorgan Chase delivered strong results this quarter with top-line growth in each of our businesses, demonstrating the power of our platform,” he said. “The U.S. and the global economy continue to show strength, despite increasing economic and geopolitical uncertainties, which at some point in the future may have negative effects on the economy.”

Dividends and buybacks: The dividend was raised this month by an impressive 43 per cent, to 80 US cents per share (US$3.20 annually). That’s the largest percentage increase since 2010 and it shows a great deal of confidence in the future of the company. The shares yield 3 per cent at the new rate.

The company has also authorized stock repurchases to a value of US$20.7-billion for the one-year period ending June 30, 2019.

Key metrics: The p/e ratio is 13.24. Trailing 12-month earnings per share are US$8.06. The 52-week trading range is US$97.93 - US$119.33.

Recommendation: Buy. JPM is my No. 1 choice among U.S. banking stocks at this time.

Consult a financial adviser before making any purchase decisions.

Disclosure: I own shares in JPM.

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/05/24 4:00pm EDT.

SymbolName% changeLast
JP Morgan Chase & Company
Walgreens Boots Alliance

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