Cornerstone stocks are key companies that should perform well even in the midst of a pandemic and emerge stronger on the other side. I recently introduced our first five cornerstone stocks. I’m now adding five more to the list, notes Gordon Pape, growth and income expert and editor of Internet Wealth Builder.
Amazon (AMZN)
Amazon’s business is booming — sales in the first quarter were up 26% to US$75.5 billion. However, profit came in below expectations at US$5.01 per share. And the company announced plans to spend the entire second-quarter profit — an estimated US$4 billion — on COVID-related costs.
We’re not thinking small,” said founder Jeff Bezos. The shares lost ground after the results came out, closing at US$2,286.04. However, Amazon is still one of the few stocks to have gained ground this year, up 23.7% from its Dec. 31 close of US$1,847.84. And the longer the crisis continues, the more sales will rise.
Fortis (FTS)
No matter what the economic conditions, we need utilities to keep the lights on and deliver the natural gas to keep furnaces running. Fortis, which is based in St. John’s, is an international company, providing services in five Canadian provinces, nine U.S. states, and three Caribbean countries.
The company has a strong balance sheet, having paid down $2.2 billion in debt last year and the quarterly dividend of $0.4775 looks safe. First-quarter revenue was down 1.8% from last year, due to reduced business demand because of lockdowns. Adjusted earnings per share were $0.68, down from $0.74 in 2019.
However, the company said that 82% of its revenue are protected by regulatory mechanisms or derived from residential sales, and that it does not face any liquidity issues. Fortis did not make any changes to its five-year capital expenditure plan or its dividend outlook.
J.B. Hunt Transport (JBHT)
If we didn’t recognize before that transportation is an essential service, we certainly do now. If it weren’t for the big rigs delivering food to our grocery stores, we’d all be starving. J.B. Hunt is one of the biggest trucking firms in the U.S. and a Fortune 500 company.
The company reported a 9% increase in revenue in the first quarter to US$2.28 billion. Earnings per share were US$0.98, down from US$1.09 a year ago. But that was partly due to a one-time charge of US$12.3 million in staff bonuses as a thank-you for their work during the crisis. The stock pays a quarterly dividend of US$0.27 a share. It’s a modest yield (just over 1%) but it looks safe.
Microsoft (MSFT)
Microsoft’s latest quarterly revenue (to March 31), was US$35 billion, up 15% from a year ago. Earnings per share were up 23% to US$1.40. More people working from home increased demand for its Windows operating system (Windows runs 90% of the world’s personal computers).
Meanwhile its commercial cloud revenue was up 39% to US$13.3 billion. The company also reported a big jump in users of its Teams service for video conferencing, distance education, and personal use. The stock is up 10.7% for the year and the shares pay a quarterly dividend of US$0.51.
Pfizer Inc. (PFE)
This is one of the world’s leading biopharmaceuticals companies and a leader in the race to develop a vaccine for the coronavirus. Last week the company announced it is aiming to have 10-20 million doses available by year-end — assuming it meets regulatory standards.
Right now, it’s in the trial stage in Germany. But the company’s portfolio goes well beyond a COVID-19 vaccine. Its business units include Oncology, Inflammation & Immunology, Rare Disease, Hospital, Vaccines, and Internal Medicine. Its Upjohn division focuses on off-patent and generic medicines.
The company recently released first-quarter results, in which it reaffirmed its guidance for earnings per share of US$2.82-2.92 for 2020 and says it has adequate liquidity for the foreseeable future. The stock pays a secure quarterly dividend of US$0.38, to yield about 4%.
Subscribe to Internet Wealth Builder here…
