Indexes like S&P500, Nasdaq Compoundand Dow Jones Industrial Average are all down since the beginning of the year. So if you’re looking to grow your money in the stock market – say $5,000 – you can start your search by looking at stocks that outperformed the market in 2022.
There are plenty of stocks to choose from, but let’s take a look at three that are poised to outperform the market again in the new year: western oil (OXY -1.54%), UnitedHealth Group (A H -1.59%)and Lululemon Athletica (LULU -12.85%).
1. Western Oil
When it comes to sectors that beat the market in 2022, energy was the clear winner. For its part, Occidental has posted a 116% year-to-date return, meaning a $5,000 investment at the start of 2022 would have grown to almost $11,000 today.
Much of this gain came in the early months of 2022 as oil and gas prices surged. Yet even as energy prices cooled, Occidental’s share price remained stable. And part of the reason why is the company’s plan to repair its balance sheet and maximize shareholder returns.
Rising oil and gas prices boosted the company free movement of capital to around $3.2 billion in its most recent quarter. Strong cash flow has helped Occidental pay off more than $25 billion in long-term debt over the past three years. Additionally, the company increased the quarterly dividend that it previously cut to just $0.01 in 2020.
Occidental is also buying back stock at a healthy pace, on track to repurchase $3 billion worth of stock in 2022. And as the company’s leverage continues to decline, investors should expect more much of its free cash flow returns to shareholders in the form of ongoing dividends and redemptions.
2. UnitedHealth Group
One of the main concerns weighing on the stock market heading into 2023 is the fear of a possible recession. Which does UnitedHealth Group a solid choice heading into the new year.
Health care – and insurance to help pay for it – is essential. Whether the economy is booming or not, most of us will need to see a doctor next year for one reason or another. UnitedHealth is the largest health insurance provider in the United States with more than 149 million customers.
With such a large and trusted customer base, UnitedHealth has been an exceptional stock to own over the past decade. Revenues and profits have increased by 185% and 287% respectively over the past 10 years. And it made a lot of money for investors. In fact, $5,000 invested in UnitedHealth in early 2013 would now be worth over $50,000.
There is no indication that UnitedHealth’s growth is slowing. Its Optum Health unit now serves more than 101 million customers and provides home, behavioral and digital care. Additionally, the Optum Insight segment provides data analytics, administrative efficiencies and payment processing.
Wall Street analysts see blue skies ahead of the company. Revenue for 2023 is expected to rise another 10% to $356 billion, with earnings per share rising to $24.95. If you’re looking for a stable producer that can beat the market, UnitedHealth is a great choice for 2023 and beyond.
3. Lululemon Athletica
Simply put, Lululemon Athletica is a superstar in the apparel industry. She first made a name for herself selling high-end yoga clothing, but over the years the company has expanded into men’s clothing, footwear and accessories.
But Lululemon doesn’t just delight its customers, it also makes shareholders very happy, because $5,000 invested in Lululemon five years ago was worth more than $22,000 today. This is a yield of 342%.
Behind this commercial success hides a company that is running at full speed. Lululemon’s revenue growth has averaged around 25% over the past five years, while competitors like Nike and Adidas averaged only 9% and 4%, respectively.
Lululemon stock was outperforming the broader market until last week, when its latest earnings results sent shares tumbling on somewhat conservative fiscal stances in the fourth quarter. However, the company’s latest revenue and earnings were both above analysts’ estimates with quarterly revenue of $1.9 billion and earnings per share of $2.00. So, for long-term investors, this is just another opportunity to buy stocks while they’re down.
Jake Lerch holds positions at Lululemon Athletica. The Motley Fool holds positions and recommends Lululemon Athletica and Nike. The Motley Fool recommends UnitedHealth Group and recommends the following options: Long Calls January 2025 at $47.50 on Nike. The Motley Fool has a disclosure policy.
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