The stock market has experienced a challenging 2022 due to geopolitical headwinds, high inflation, and the Fed’s aggressive interest rate hikes. With the central bank raising interest rates to the highest level since 2008, inflation showed signs of cooling off in the last three months of 2022.

The consumer price index (CPI) fell for the sixth consecutive month in December. It increased 6.5% year-over-year and declined 0.1% sequentially. Although progress has been made in bringing inflation down from its high of 9.1% year-over-year rise in June, minutes from the Fed’s policy meeting show that the central bank remains committed to bringing inflation down to its 2% target. So, a pause in interest rate hikes is highly unlikely this year.

As the economy and the stock market are expected to remain under pressure, it could be safe to consider investing in shares of businesses that can survive an economic downturn based on the inelastic demand for their products.

To that end, Walmart Inc. (WMT), Molina Healthcare, Inc. (MOH), and International Paper Company (IP) could be ideal additions to a retirement portfolio.

Walmart Inc. (WMT)

WMT engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. 

On January 5, 2023, WMT announced that it was now operating 36 drone delivery hubs across seven states. It completed more than 6,000 deliveries over the past year in as little as 30 minutes. The company is well positioned to offer drone delivery at scale; with its 4,700 stores located within 90% of the U.S. population, it will be able to deliver more items through drones helping it cut costs and drive higher revenues.

In terms of the trailing-12-month Return on Common Equity, WMT’s 11.61% is 9.6% higher than the 10.59% industry average. Likewise, its 2.44% trailing-12-month asset turnover ratio is 194.1% higher than the industry average of 0.83%.

WMT’s total revenues for the third quarter ended October 31, 2022, increased 8.7% year-over-year to $152.81 billion. Its adjusted operating income, constant currency, rose 4.6% year-over-year to $6.06 billion. In addition, its adjusted EPS came in at $1.50, representing a 3.4% increase from the year-ago quarter.  

WMT’s EPS for the quarter ending April 30, 2023, is expected to increase 7.4% year-over-year to $1.40. Its revenue for the quarter ending January 31, 2023, is expected to rise 4.3% year-over-year to $158.09 billion. It surpassed the Street EPS estimates in three of the trailing four quarters. The stock has gained 15.9% over the past six months to close the last trading session at $145.29. 

WMT’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.    

Within the A-rated Grocery/Big Box Retailers industry, it is ranked #8 out of 39 stocks. It has an A grade for Sentiment and a B for Stability. Click here to see the additional POWR Ratings of WMT for Growth, Value, Momentum, and Quality.

Molina Healthcare, Inc. (MOH)

MOH offers managed healthcare services under Medicaid and Medicare programs and through state insurance marketplaces. The company operates through four segments: Medicaid; Medicare; Marketplace; and Other.

On October 3, 2022, MOH announced the closure of its acquisition of AgeWell New York’s Medicaid Managed Long Term Care (MLTC) business. As of September 30, 2022, AgeWell’s MLTC business served approximately 13,000 members. This is expected to have a positive impact on MOH’s topline.

In terms of the trailing-12-month net income margin, MOH’s 2.77% compares to the negative industry average. Likewise, its 4.76% trailing-12-month EBITDA margin is 27.6% higher than the industry average of 3.73%. Furthermore, the stock’s 2.54% trailing-12-month asset turnover ratio is 652.8% higher than the industry average of 0.34%.

For the fiscal third quarter ended September 30, 2022, MOH’s total revenue increased 12.6% year-over-year to $7.93 billion. Its operating income increased 51.6% year-over-year to $335 million. The company’s adjusted net income increased 54.9% year-over-year to $254 million. In addition, its adjusted EPS came in at $4.36, representing an increase of 54.1% year-over-year.

For the quarter ending December 31, 2022, MOH’s EPS and revenue are expected to increase 39.5% and 6.2% year-over-year to $4.02 and $7.87 billion, respectively. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 6.3% to close the last trading session at $300.25.

MOH’s strong prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It has a B grade for Growth, Value, and Quality. Within the A-rated Medical – Health Insurance industry, it is ranked #5 out of 11 stocks. Click here to see the other MOH ratings for Momentum, Stability, and Sentiment.

International Paper Company (IP)

IP operates as a packaging company primarily in the United States, the Middle East, Europe, Africa, the Pacific Rim, Asia, and the Rest of the Americas. It operates through two segments: Industrial Packaging and Global Cellulose Fibers.

In terms of the trailing-12-month net income margin, IP’s 9.14% is 2.8% higher than the 8.88% industry average. Likewise, its 12.54% trailing-12-month levered FCF margin is 143.3% higher than the industry average of 5.16%. Furthermore, the stock’s 0.78% trailing-12-month asset turnover ratio is 2.3% higher than the industry average of 0.76%.

IP’s net sales increased 9.9% year-over-year to $5.40 billion for the third quarter ended September 30, 2022. Its net earnings increased 10.1% year-over-year to $951 million. The company’s EPS came in at $2.64, representing an increase of 20% year-over-year.

Analysts expect IP’s revenue for the quarter ending December 31, 2022, to increase 2.2% year-over-year to $5.20 billion. Its EPS for fiscal 2022 is expected to increase 18% year-over-year to $3.78. Over the past three months, the stock has gained 16.7% to close the last trading session at $38.25.

It’s no surprise that IP has an overall rating of B, which equates to a Buy in our POWR Ratings system.

Within the A-rated Industrial – Paper industry, it is ranked #4 out of 12 stocks. It has a B grade for Growth, Value, and Quality. Click here to see the other IP ratings for Momentum, Stability, and Sentiment.

WMT shares were trading at $144.51 per share on Tuesday afternoon, down $0.78 (-0.54%). Year-to-date, WMT has gained 1.92%, versus a 4.09% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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