These 2 blue-chip stocks just hit all-time highs
Investors have had a love-hate relationship with the stock market so far in 2022. Sharp early declines made some market participants skeptical of the chances of another year of positive returns, but they also opened the door. way for bargain hunters to buy shares of favorite companies at low prices. While some of the more pessimistic scenarios have been ruled out, the main market benchmarks have recovered somewhat. Wednesday, however, marked a break in the latest uptrend. Starting at 11:30 a.m. ET, the Dow Jones Industrial Average (^ DJI -0.19% ) was down 60 points to 35,234. S&P500 ( ^GSPC -0.63% ) fell 22 points to 4,610, and the Nasdaq Compound ( ^IXIC 0.00% ) fell 104 points to 14,515.
Even with the indices falling, a few well-known blue chip stocks hit all-time highs today. Both companies have done a good job of weathering the COVID-19 pandemic over the past two years, and they both have substantial growth prospects with solid business models and fundamental strength. Let’s take a closer look UnitedHealth Group ( A H 1.98% ) and Wholesale Costco ( COST 1.14% ) to see why they are hitting new highs on Wednesday.
Shares of UnitedHealth Group rose more than 1.5% on Wednesday morning, bucking the bearish trend in the broader market. Health insurance giant and component Dow Jones Industrials has posted only a modest 4% gain so far in 2022, but the stock is up 37% over the past year and has more than doubled since the beginning of 2019.
UnitedHealth brings a lucrative combination of companies to the table. Its central unit UnitedHealthcare offers health insurance plans to those seeking health coverage, bringing together networks of doctors and other healthcare professionals, then making health care available through government programs, employee benefits and direct sales to individuals. Meanwhile, the Optum health services side of the business has grown much faster, using technology and data-driven insights to help improve health and wellness across its network.
UnitedHealth hasn’t stopped trying to innovate either. The company announced this week that it would acquire a home healthcare service provider LHC Group in a $5.5 billion merger. LHC’s integration into Optum will expand UnitedHealth’s reach into the rapidly growing home care niche.
Healthcare spending is not falling anywhere, keeping UnitedHealth’s business in high demand. Investors can expect further rises in the healthcare giant’s share price in the coming years.
Shoppers still love Costco
Meanwhile, shares of Costco Wholesale rose nearly 1%. The warehouse retailer has barely made a year-to-date gain, but the stock has risen 61% over the past year.
Costco has worked its business model to perfection, charging a modest membership fee to give shoppers the right to buy unlimited amounts of merchandise at its big-box warehouse stores. This allowed Costco to offer lower prices on its products than its competitors while being able to rely on its royalty revenue to provide a solid and growing profit for the company.
The COVID-19 pandemic has even helped Costco grow an important facet of its global operations. The need for faster e-commerce capabilities led to a dramatic increase in Costco’s online ordering channel, and members were happy to gravitate there even though they’ve now returned to stores to shop as well.
Costco’s long-term returns to shareholders have been exceptional, and there is every reason to expect its success to continue. Indeed, for Costco and UnitedHealth, all-time highs may just be the start.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.