August 8, 2022, Cigna Corporation (NYSE:CI) and Restaurant Brands International Inc. (NYSE:QSR)

Following impressive Q2 earnings beats, these two names look like the best stocks to buy now.

We’ve reached circus season in the stock market where sometimes good news is bad and bad news is good. Following a stronger-than-expected jobs report, the indices initially slid because Mr. Market feared it could mean more rate hikes. Yet, they closed marginally higher for the week and showed some signs of life. With a big economic week ahead, including the latest inflation numbers, Cigna Corporation (NYSE:CI) and Restaurant Brands International Inc. (NYSE:QSR) look like the best stocks to buy now.

Especially following their blowout earnings reports last week.

Both companies are different beasts but cut from the same cloth as giants in their respective fields- Cigna with health insurance and Restaurant Brands with fast food. Both reported earnings last week and immensely impressed both investors and analysts. With both stocks also performing strongly this summer and operating with a robust fundamental backbone, they are no-brainers to consider the best stocks to buy now.

Although the market sentiment is okay, you should still be cautious. The CPI numbers will come out on Wednesday (August 10, 2022) and could move the markets. The geopolitical situation remains volatile at best with the situation in Ukraine, Taiwan, and, once again, Israel concerning investors. The Fed could also get even more aggressive. So hedge your bets, and consider stocks like these two. Each offers diversification to your portfolio and a potent blend of must-have qualities as the best stocks to buy now.

Cigna Corporation (NYSE:CI)

The health insurance behemoth continues touching record highs and could have a double-digit upside following another earnings beat.

For months now, a prominent player in the healthcare providers and services industry, health insurance giant Cigna, has been an outperformer hitting new high after new high and seeing price upgrade after price upgrade. The stock is up almost 24% year-to-date and 17.35% since touching a three-month low in mid-June.



However, this shouldn’t come as much of a shock as Cigna has been a consistent outperformer for the last decade, pushing through whatever comes its way. ​


Based on Cigna’s latest earnings report, its growth prospects, underlying fundamentals, and the amount of analyst upgrades, this stock is nowhere near its peak.

There are too many reasons why it’s one of the best stocks to buy now.

CI’s Sixth Consecutive Earnings Beat May Be the Most Impressive Yet

Cigna has made such a habit out of positive earnings surprises that it probably shouldn’t be considered a surprise anymore. Last Thursday (August 4, 2022), Cigna beat estimates for the sixth consecutive quarter and raised its full-year outlook. This was also the 19th out of the last 21 quarters that Cigna beat estimates.


Source: Yahoo! Finance

Cigna’s outstanding quarter was bolstered mainly by solid contributions from its businesses, strong membership growth, and lower costs resulting from a slow rebound in non-urgent medical procedures.

On the bottom line, Cigna reported $6.22 EPS, beating the consensus estimate of $5.62 by $0.60 and improving 18.7% year-over-year. Revenue increased 5.4% year-over-year to $45.48 billion and beat the consensus estimate of $44.34 billion.

Following this report, Cigna improved both short-term and long-term guidance. In the short-term, i.e., the rest of 2022, Cigna expects

  • Adjusted revenues to be $178 billion minimum, a 2.2% improvement from its previously reported figure.
  • EPS to be a minimum of $22.90, an 11.9% improvement from the 2021 reported figure.
  • Total medical customer growth of at least 8,000,000 compared to the previous estimate of “at least 7,250,000.”
  • MCR of 81.5-82.5% for 2022 compared to previous projections of 82-83.5%.
  • Operating cash flows to be a minimum of $8.5 billion, an improvement from the previous projection of “at least $8.25 billion.”


Moreover, over the long term, Cigna expects to see its revenue grow 6-8% and annual adjusted EPS grow between 10-13%.

Other forecasts are even more bullish, though. Marketbeat sees Cigna’s earnings growing by 10.28% in the coming year. Finbox sees Cigna’s revenue growing at a 34.2% 5-year CAGR and net income growing at 33.2%

It probably shouldn’t be surprising that Cigna touched its year-to-date and all-time high of $284.46 following this earnings report.

Despite This Bull Run, Cigna Remains Surprisingly Undervalued

Cigna’s stock is on a roll with no end in sight. Yet what if I were to say that it is one of the best stocks to buy now because it remains shockingly undervalued? Despite the stock’s outperformance, consistent earnings beats, and mouth-watering growth prospects?

Well, it’s true, and the numbers don’t lie. Consider the following multiples.

  • 8x trailing P/E
  • 9x forward P/E
  • 98x price-to-book
  • 51x trailing price-to-sales
  • 51x forward price-to-sales

Strong Fundamentals and Outstanding Dividend

First and foremost, you can’t call out Cigna’s outstanding fundamentals without first noting that management has been aggressively buying back shares. Last quarter, Cigna bought back 9.7 million shares of common stock worth roughly $2.3 billion.

Additionally, during the six months ended Jun 30, 2022, net cash provided by operating activities increased over 4x year-over-year to $3.3 billion.

Furthermore, institutions hold the stock structure tightly, with 94.10% ownership. Margins such as its 13.0% gross margin, 11.6% ROCE, and 9.8% free cash flow yield also depict a well-run, profitable, and efficient company.

What’s really telling, though, about why Cigna is one of the best stocks to buy now is its dividend. It has a stable 1.59% dividend yield and could grow 12.0% at a whopping 5-year CAGR of 151.2%.

A 100% Technical BUY Rating

It is rare to be all in on stocks at a 100% BUY clip. However, according to Barchart, based on several short-, medium-, and long-term indicators, that is precisely what Cigna is.

These indicators include its

  • 20 Day Moving Average
  • 20 – 50 Day MACD Oscillator
  • 20 – 100 Day MACD Oscillator
  • 20 – 200 Day MACD Oscillator
  • 50 Day Moving Average
  • 50 – 100 Day MACD Oscillator
  • 50 – 150 Day MACD Oscillator
  • 50 – 200 Day MACD Oscillator
  • 100 Day Moving Average
  • 150 Day Moving Average
  • 200 Day Moving Average
  • 100 – 200 Day MACD Oscillator


Furthermore, BarChart data notes that Cigna has yet to touch any of its three resistance points, which could mean further upside potential from a technical perspective.

Analysts Continue Their Bullishness and Double-Digit Upside Forecasts for Cigna

Analyst love for Cigna is nothing new, and in the previous quarter, it was one of the market’s most upgraded stocks. Following its earnings report, three analysts boosted their price targets, most notably Mizuho, who kept a BUY rating and raised its CI price target from $291.00 to $330.00.

This represents a 17.12% upside from August 5, 2022’s $281.77 closing price.

Besides Mizuho, Credit Suisse raised its price target to $329, Oppenheimer kept an OUTPERFORM rating and boosted its target from $310.00 to $320.00. Royal Bank of Canada also boosted its target from $272.00 to $294.00.

According to TipRanks, 19 Wall Street analysts offered 12-month price targets for Cigna in the last 3 months. It currently trades with a high price target of $350.00, a low of $270.00, and an average of $309.68. The average price target represents a 9.91% upside from August 5, 2022’s close.

CI’s year-to-date low and high are $211.24 and $284.46, respectively.

Restaurant Brands International Inc. (NYSE:QSR)

The fast food giant’s stock is scorching hot and could have another 20+% to run.

We may or may not officially be in a recession, but the fact that the GDP has contracted for two consecutive quarters. The Fed may also purposefully get us into one just to cool down inflation, which is certainly concerning.

But for fast food stocks like Restaurant Brands, this may not be such a bad thing. That’s because food stocks like this, throughout history, have proven to be solid defensive plays during recessions.

Restaurant Brands is the parent company of Popeyes, Tim Hortons, and Burger King and has all you need as one of the best stocks to buy now. It has brand equity, purchasing power, excellent fundamentals, and analyst upside.

Perhaps investors are beginning to wake up to this. Since hitting a 2022 low of $46.15 in mid-June, the stock has rampaged forward ​​29.12% without any end in sight.


EPS Grew Triple-Digits Year-Over-Year and Quarterly Restaurant Sales Rose More Than Expected

Like Cigna, Restaurant Brands is one of the best stocks to buy now based mainly on its latest earnings report, which beat top- and bottom-line estimates.

First and foremost, the prominent restaurant operator reported $0.82 EPS for the quarter, beating the consensus estimate of $0.73 by $0.09. This also marked the sixth consecutive quarter QSR beat estimates.


Source: Yahoo Finance

QSR’s revenue increased 14.0% year-over-year to $1.64 billion during the quarter, compared to analysts’ expectations of $1.57 billion. Much of this was due to 16.5% revenue growth from Tim Hortons Canada, development strength at Popeyes, and robust contributions from digital sales.

Although QSR didn’t provide updated guidance, many of its growth projections are looking increasingly bullish thanks to this earnings report.

  • Earnings for Restaurant Brands International are expected to grow by 49% in the coming year.
  • Net income is projected to grow 63.9% and average 19.6% over the next five fiscal years.
  • Revenue is expected to see a 7% 5-year CAGR.

Sizzling Margins and a Strong Dividend

QSR isn’t the cheapest stock in the market right now, and its RSI indicates that it may be nearly overbought. Still, it has the fundamentals and dividends to back up such a high valuation.

First, its outstanding free cash flow yield of 5.8% justifies its valuation.

Helping its case as one of the best stocks to buy now are margins that display outstanding profitability, efficiency, and operations, such as its

  • 3% ROCE
  • 4% gross margin
  • 7% operating margin


However, QSR’s dividend and dividend growth track record put the patty on the Whopper. Its 3.62% dividend yield is outstanding and has grown for 7 consecutive years. Although its payout ratio is higher than ideal, projections show that the dividend still has strong growth potential and could see a 25.5% CAGR.

A Royal Bank of Canada Post-Earnings Upgrade Sees QSR Moving 20+%

According to TipRanks, 16 Wall Street analysts offered 12-month price targets for QSR in the last 3 months. The stock currently has a high price target of $75.00, a low of $40.21, and an average of $64.39. The average price target represents an 8.06% upside from August 5, 2022’s closing price of $59.59.

Furthermore, following its impressive earnings report, the Royal Bank of Canada kept an OUTPERFORM rating while hiking its price target from $68.00 to $72.00, representing a 20.83% upside. Cowen also boosted its target from 62.00 to $65.00, as did Robert W. Baird from $56.00 to $63.00.

QSR’s year-to-date low and high are $46.15 and $61.09, respectively.