3 Stocks That Could Survive a Market Catastrophe

The Federal Reserve announced its third consecutive interest rate hike of 75 basis points yesterday. With the Fed officials voting unanimously to lift the benchmark federal-funds rate to a range between 3% and 3.25%, the central bank seems intent on fulfilling its mandate of maintaining low and stable prices while being prepared to risk a possible recession.

Since a soft landing for the economy increasingly seems like an improbable scenario, the market may not return to stability anytime soon. Amid this backdrop, the best stocks to buy may be those that have survived previous market routs and emerged as winners.

To that end, it could be wise to invest in fundamentally solid and time-tested stocks UnitedHealth Group Incorporated (UNH), Johnson & Johnson (JNJ), and The Coca-Cola Company (KO).

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. Additionally, UNH provides access to networks of care provider specialists, consumer engagement, and financial services.

On September 21, UNH and Peloton Interactive Inc. (PTON) renewed and expanded their relationship to extend subscription and preferred pricing benefits to the commercial member. This engagement is set to provide additional value to UNH’s customers, which would further secure its client base.

On September 7, UNH and Walmart Inc. (WMT) announced the beginning of a 10-year wide-ranging collaboration. Optum, a UNH subsidiary, would provide proven clinical abilities to assist select Walmart Health locations and improve people's health outcomes by advancing value-based care. The collaboration is expected to expand further to include additional products and services over time.

For the fiscal 2022 second quarter ended June 30, 2022, UNH’s revenues increased 12.6% year-over-year to $80.33 billion. The company’s earnings from operations rose 19.3% from the year-ago value to $7.13 billion. In addition, its net earnings and adjusted earnings per share attributable to UNH common shareholders came in at $5.20 billion and $5.57, up 18.9% and 18.5% year-over-year, respectively.

Analysts expect UNH's revenue for the fiscal year 2022 (ending December 2022) to come in at $322.20 billion, indicating a 12% rise from the last year. Also, Street expects the company's EPS for the current year to grow 14.8% year-over-year to $21.84. The company has been able to exceed the consensus EPS estimates in each of the trailing five fiscals.

UNH’s shares have gained 24.2% over the past year to close the last trading session at $512.08.

UNH's POWR Ratings reflect its fundamental strength. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

UNH has a B grade for Sentiment, Quality, Growth, and Stability. In the A-rated Medical - Health Insurance industry, it is ranked #4 of 11 stocks.

Beyond what we’ve stated above, we have also given UNH grades for Value and Momentum. Get all UNH ratings here.

Johnson & Johnson (JNJ)

JNJ is a worldwide researcher, developer, manufacturer, and seller of various healthcare products. The company operates through three segments: Consumer Health; Pharmaceuticals; and MedTech.

On September 15, JNJ announced that its Board of Directors had authorized the repurchase of up to $5 billion of its common stock. The repurchases may be made at management’s discretion on the open market or through privately negotiated transactions. This move demonstrates the company’s confidence in its business prospects and would increase the value of the holdings for existing shareholders.

On September 6, Biosense Webster, Inc., a subsidiary of JNJ MedTech, announced the launch of the OCTARAY™ Mapping Catheter with TRUEref™ Technology. The catheter has eight splines with improved electrode spacing options to provide shorter and more efficient mapping times of cardiac arrhythmias, including atrial fibrillation (AFib).

JNJ’s sales increased 3% year-over-year to $24.02 billion in the fiscal 2022 second quarter ended June 30. During the same period, the company’s gross profit increased 2.4% from the prior-year value to $16.10 billion, while its adjusted net earnings improved 4.3% year-over-year to $6.91 billion. As a result, Adjusted EPS increased 4.4% from its year-ago value to $2.59.

Analysts expect JNJ’s revenue for the fiscal year (ending December 2022) to increase 1.9% year-over-year to $95.53 billion. The company’s EPS is expected to increase 2.8% year-over-year to $10.08 during the same period. Moreover, JNJ has topped the consensus EPS estimates in each of the trailing five fiscals.

The stock has dipped marginally over the past year to close the last trading session at $163.28.

JNJ’s POWR Ratings reflect its inherent resilience. The company’s overall A rating translates to Strong Buy in our proprietary rating system. The stock has a grade of A for Stability and B for Growth, Value, and Quality.

JNJ tops the list of 164 stocks in the Medical – Pharmaceuticals industry.

Beyond what we’ve stated above, we have also given grades for Momentum and Sentiment for JNJ. Get all JNJ ratings here.

The Coca-Cola Company (KO)

KO manufactures, markets, and sells various non-alcoholic beverages worldwide as a world-renowned beverage company. The company operates through six segments: Europe, the Middle East, and Africa; Latin America; North America; Asia Pacific; Global Ventures; and Bottling Investments.

On June 21, SmartWater, a premium water brand in KO’s portfolio, announced acclaimed actor and performer Zendaya as its newest global brand ambassador. This move is expected to augment the brand equity of the company.

The same month, KO and Brown Forman Corporation (BF.A, BF.B) announced a global relationship to debut the iconic Jack & Coke cocktail as a branded, ready-to-drink pre-mixed cocktail option. The new product might bolster the company’s revenue stream.

For the second quarter of fiscal 2022 ended July 1, 2022, KO’s net operating revenue increased 11.8% year-over-year to $11.33 billion. The company’s non-GAAP gross profit increased 7.2% year-over-year to $6.67 billion, while its non-GAAP net income improved 4.4% year-over-year to $3.06 billion. As a result, non-GAAP net income per common share increased 2.9% from its year-ago value to $0.70.

Analysts expect KO’s revenue for the fiscal (ending December 2022) to increase around 8.9% from the previous year to $42.13 billion, while its EPS is expected to increase 6.2% year-over-year to $2.46. The company’s impressive earnings surprise history has seen it surpass EPS estimates in each of the trailing four fiscals.

The stock has gained 9.9% over the past year to close its last trading session at $59.40.

KO’s stable outlook has earned it an overall POWR Ratings of B, which translates to a Buy in our proprietary rating system. KO also has a B grade for Stability, Sentiment, and Quality.

Within the A-rated Beverages industry, it is ranked #21 out of 35 stocks. To see additional POWR Ratings for Growth, Value, and Momentum for KO, click here.

UNH shares were trading at $517.46 per share on Thursday afternoon, up $5.38 (+1.05%). Year-to-date, UNH has gained 4.05%, versus a -20.30% rise in the benchmark S&P 500 index during the same period.

Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.

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