Easing inflation and smaller rate hikes by the Fed have revived investor optimism. However, the Fed's commitment toward the 2% inflation target could keep the market under pressure for some.E asing inflation and smaller rate hikes by the Fed have revived investor optimism. However, the Fed's commitment toward the 2% inflation target could keep the market under pressure for some time. Given this backdrop, it would be wise to invest in quality stocks UnitedHealth Group (UNH), PepsiCo (PEP), and Kroger (KR) that could be big winners in 2023. Read on.Favorable macro data on receding inflationary pressure and stable economic growth resulted in the Federal Reserve slowing down its rate hikes to 0.25 percentage points. The already-raised investor optimism was rekindled further by this move.On the other hand, Federal Reserve Chairman Jerome Powell's hawkish comments suggested rate hikes would continue until the committee is convinced that inflation is heading towards the 2% target.
Experts believe such persistent rate hikes could tip the economy into recession. On the bright side, some experts think since the economy performed better than anticipated, this could steer it away from the recession track.
However, some strategists like Mike Bell of JPMorgan believe that the stock markets could be in trouble without a recession. He believes that if the Fed fails to rein in interest rates like investors hope, it could have a more far-reaching impact.
Amid such uncertainties, fundamentally strong stocks UnitedHealth Group Incorporated (UNH), PepsiCo, Inc. (PEP), and The Kroger Co. (KR) might be solid buy options in 2023.
UnitedHealth Group Incorporated (UNH)
UNH is a diversified healthcare company. The company operates through four segments: Optum Health; OptumInsight; OptumRx; and UnitedHealthcare. It offers consumer-oriented health benefit plans and services, software and information products, health care coverage, and well-being services.
On January 23, 2023, Optum Rx, UNH's pharmacy services company, launched Price Edge, a tool that seamlessly compares direct-to-consumer pricing for traditional generic drugs with insurance pricing to ensure members receive the lowest prescription drug price. This should benefit the company.
On January 5, Northern Light Health and Optum announced a strategic relationship to enhance the healthcare experience throughout Maine. Administrative efficiency is expected to increase, along with advanced innovative technology that could help serve patients more effectively.
On November 16, UNH and Life Time Group Holdings, Inc. (LTH) announced an expansion of their relationship to include access to all Life Time locations. This is expected to help UNH deliver additional value to its customers, thereby driving appreciation of brand equity and market expansion.The stock's trailing-12-month EBITDA margin of 9.82% is 151.2% higher than the industry average of 3.91%. Its trailing-12-month ROCE is 26.26% compared to the industry average of negative