Our theme of Capex Cycle Stocks – which includes heavy equipment makers, electrical systems suppliers, automation solutions providers, and semiconductor fabrication equipment players – has gained about 5% year-to-date, compared to the S&P 500 which remains up by 4% over the same period. Capital spending by U.S. companies remained very strong over 2022, driven by low-interest rates, a focus on boosting capacity, and moving production back to the U.S. following the supply chain snarls of the Covid-19 re-opening. Automation and productivity improvements have also been a key theme for manufacturers, given surging labor costs. Overall, companies within the S&P 500 are estimated to have grown their capital expenditures by 19.8% in 2022. [1]

We believe that UnitedHealth stock (NYSE: UNH) is a better pick than HCA stock (NYSE: HCA), a healthcare facilities operator, given its better prospects. Although UNH is trading at a comparatively higher valuation of 1.4x trailing revenues, compared to 1.1x for HCA, this gap in valuation makes sense, given the former’s better revenue growth and financial position. Looking at stock returns, UNH stock, with -2% returns in the last twelve months, has fared better than HCA stock, down 6%, and the broader S&P 500 index, down 10%. There is more to the comparison, and in the sections below, we discuss why we believe UNH stock will offer better returns than HCA stock in the next three years. We compare a slew of factors, such as historical revenue growth, returns, and valuation, in an interactive dashboard analysis of UnitedHealth vs. HCA: Which Stock Is A Better Bet? Parts of the analysis are summarized below.

Co-founder & CEO of Vinovest.

Omar Choucair, CFO, Trintech, has spent 20+ years leading financial and administrative organizations for public and private companies.

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