Indexes like the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are all down year to date. So, if you're looking to put money to work in the stock market -- say, $5,000 -- you can start your search by looking at stocks that have outperformed the market in 2022.
There are many stocks to choose from, but let's take a look at three that are poised to pull ahead of the market again in the new year: Occidental Petroleum (OXY 0.94%), UnitedHealth Group (UNH 2.35%), and Lululemon Athletica (LULU 0.71%).
Image source: Getty Images.
1. Occidental Petroleum
When it comes to market-beating sectors in 2022, energy was the big winner. For its part, Occidental has recorded 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 that gain came in the first few months of 2022 as oil and gas prices surged. Yet even as energy prices have cooled, Occidental's share price has held steady. And part of the reason why is the company's plan to fix its balance sheet and maximize shareholder returns.
Higher oil and gas prices have boosted the company's free cash flow to around $3.2 billion in its most recent quarter. Strong cash flow has helped Occidental retire more than $25 billion of long-term debt in the last three years. Moreover, the company has been growing the quarterly dividend it previously slashed to just $0.01 back in 2020.
Data by YCharts.
Occidental is also buying back shares at a healthy clip, on track to repurchase $3 billion of stock in 2022. And as the company's debt load continues to shrink, investors should expect more of its free cash flow to be returned to shareholders in the form of continued dividends and buybacks.
Image source: Getty Images.
2. UnitedHealth Group
One of the top concerns hanging over the stock market heading into 2023 is the fear of a potential recession. That makes UnitedHealth Group a solid pick heading into the new year.
Healthcare -- and the insurance to help pay for it -- is essential. Whether the economy is roaring or not, most of us will need to visit a doctor next year for one reason or another. UnitedHealth is the largest health insurance provider in the U.S. with over 149 million customers.
With such a large, reliable customer base, UnitedHealth has been an outstanding stock to own over the last decade. Revenue and earnings have grown 185% and 287%, respectively, over the last 10 years. And that's made investors plenty of money. In fact, $5,000 invested in UnitedHealth at the start of 2013 would now be worth over $50,000.
Data by YCharts.
There's no sign UnitedHealth's growth is slowing down. Its Optum Health unit now serves over 101 million customers and provides in-home, behavioral, and digital care. In addition, the Optum Insight segment delivers data analytics, administrative efficiencies, and payment processing.
Wall Street analysts see blue skies ahead for the company. Revenue for 2023 is projected to grow another 10% to $356 billion with earnings per share jumping to $24.95. If you're looking for a steady grower with the ability to beat the market, UnitedHealth is a top choice for 2023 and beyond.
Image source: Getty Images.
3. Lululemon Athletica
Simply put, Lululemon Athletica is an apparel industry superstar. It first made a name for itself by selling premium yoga apparel, but over the years, the company has expanded into menswear, shoes, and accessories.
But Lululemon isn't just thrilling its customers -- it's also making shareholders very happy as $5,000 invested in Lululemon five years ago would be worth over $22,000 today. That's a return of 342%.
Behind this market success is a company firing on all cylinders. Lululemon's revenue growth has averaged around 25% over the last five years, while competitors like Nike and Adidas have averaged only 9% and 4%, respectively.
Data by YCharts.
Lululemon stock was outpacing the broad market until last week when its latest earnings results sent shares tumbling due to somewhat conservative fiscal fourth-quarter guidance. However, the company's latest revenue and earnings were both ahead of analysts' estimates with quarterly revenue of $1.9 billion and earnings per share of $2.00. So, for long-term investors, it's just another opportunity to pick up shares while they're down.
