{"id":3597,"date":"2023-05-03T08:14:31","date_gmt":"2023-05-03T12:14:31","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/unitedhealth-and-other-stocks-to-buy-for-an-end-to-the-feds-rate-hikes\/"},"modified":"2023-05-03T08:14:32","modified_gmt":"2023-05-03T12:14:32","slug":"unitedhealth-and-other-stocks-to-buy-for-an-end-to-the-feds-rate-hikes","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=3597","title":{"rendered":"UnitedHealth and Other Stocks to Buy for an End to the Fed\u2019s Rate Hikes"},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

The market hopes the Federal Reserve\u2019s long-awaited pause will be the one that refreshes. It may, instead, be the one that depresses\u2014and healthcare and consumer staples stocks should benefit. <\/p>\n

The
\n S&P 500 index
\n has already gained about 7% this year, and the overarching driver has been expectations that the Fed is nearing the end of its interest rate hikes. Few will argue that the end is near. The rate of inflation has been falling, economic growth has already started to weaken, and regional-bank stocks continue to signal weakness in the financial system. The idea is that, after a few bumps in the near term, the economy should stabilize and go on its merry way\u2014and the stock market will rise with it. <\/p>\n

\n

Perhaps. But there\u2019s another way to read the rally\u2014that it has been spurred by investors front-running the end of the Fed\u2019s tightening who will be motivated to sell stocks once the pause becomes a reality. \u201cFed Chair Powell on Wednesday will signal the Pause \u2018news\u2019 whose \u2018rumor\u2019 markets began to anticipate aggressively at the March S&P 500 trough,\u201d writes Evercore ISI strategist Julian Emanuel. \u201cWe expect a \u2018sell the news\u2019 reaction as soon as that rumor turns out to be true.\u201d <\/p>\n

If that\u2019s the case, defensive sectors like healthcare and staples could perform the best. They\u2019ve been largely left out of this year\u2019s rally, which has been led by
\n Meta Platforms
\n (ticker: META) and the rest of Big Tech. The
\n Health Care Select Sector SPDR
\n exchange-traded fund (XLV) is down 0.6% in 2023, while the
\n Consumer Staples Select Sector SPDR
\n ETF (XLP) is up 4.1%. <\/p>\n

Emanuel, though, doesn\u2019t recommend just buying the sectors outright. Instead, he screened for healthcare and staples stocks in the
\n Russell 1000 index
\n that have underperformed the median stock in their sectors for the year even though their earnings per share are expected to grow faster than their sector\u2019s. The stocks that made the list include
\n Bristol Myers Squibb
\n (BMY),
\n Johnson & Johnson
\n (JNJ),
\n Keurig Dr Pepper
\n (KDP), and
\n J.M. Smucker
\n (
\n SJM
\n ). <\/p>\n

Two stand out.
\n UnitedHealth
\n Group (UNH) is down just over 6% this year, even though analysts expect it to grow EPS at just over 12% this year to $24.98. That\u2019s in contrast to the 3% gain for the median healthcare stock, and a slight drop expected EPS for the Health Care Select Sector SPDR\u2019s aggregate earnings. To accomplish that growth, analysts see UnitedHealth\u2019s sales increasing just over 12% to about $364 billion this year, as the company signs up millions of new Medicare Advantage members and expands its Optum segment, which provides healthcare and medicine to its customers, among other services. <\/p>\n

\n Conagra Brands
\n (CAG), which sells food under the Bird\u2019s Eye, Hunt\u2019s, and Swiss Miss brands, among others, also made the list. The stock has fallen 0.7% the year, lagging the Consumer Staples ETF\u2019s 0.2% decline, though analysts expect Conagra\u2019s earnings to grow 8.5% this year to $2.81, more than double the sector\u2019s growth rate, as it raises prices to boost sales growth. Gross margin is also expected to expand this year, to around 27% from 26% last year, as input costs decline. <\/p>\n

Growing earnings and a lower price? What\u2019s not to like?<\/p>\n

Write to <\/strong>Jacob Sonenshine at jacob.sonenshine@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The market hopes the Federal Reserve\u2019s long-awaited pause will be the one that refreshes. It may, instead, be the one that depresses\u2014and healthcare and consumer staples stocks should benefit. The S&P 500 index has already gained about 7% this year, and the overarching driver has been expectations that the Fed is nearing the end of […]<\/p>\n","protected":false},"author":1,"featured_media":3598,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-3597","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nUnitedHealth and Other Stocks to Buy for an End to the Fed\u2019s Rate Hikes | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The market hopes the Federal Reserve\u2019s long-awaited pause will be the one that refreshes. 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