The stock market is a dynamic and ever-evolving entity that provides investors with many opportunities to grow their wealth. As 2023 approaches, investors are eager to see which stocks have the potential to perform well in the coming year. In this article, we have compiled a list of the 10 best stocks for 2023. Through careful analysis of market trends, company performance, and industry expectations, we have identified stocks that are poised for growth and the most promising return on investment. Whether you’re a seasoned investor or just starting out, this article provides valuable insights and information to help guide your investment decisions for the year ahead.
Market value: $979.9 billion
Dividend Yield: N/A
E-commerce and cloud-computing juggernaut Amazon.com (AMZN,$96.05) is so cheap these days that managers at the Dodge & Cox Stock Fund — one of the best low-fee mutual funds — who stick to price, recently scooped up the stock. . Managers say they take the long view and are drawn to companies with “attractive fundamentals where expectations and valuations have fallen.”
Amazon fits the bill. Shares are down 40% in the past 12 months. Is this growth-stock darling now a value stock? Shares are cheap compared to historical levels. At $96, Amazon stock trades at 50 times expected earnings in 2023; Its five-year historical P/E is 73.
A recession may dampen near-term results, but the company’s dominant role in its core markets will boost AMZN — and help it land a spot on this list of the best stocks to buy in 2023. After a sum-of-the-parts analysis, Shyam Patil, of investment firm Susquehanna International Group, recently set a 12-month price target on the stock of $140, an upside of about 46%.
Advanced Micro Devices
Market value: $115.4 billion
Dividend Yield: N/A
Don’t neglect the principles of diversification while adjusting your portfolio to include the best stocks of 2023, and don’t completely abandon the tech or growth side of the market. Instead, take a barbell approach, says Tony DiSpirito, managing director and portfolio manager at BlackRock. This allows you to scoop up value-focused stocks at historically attractive relative price-to-earnings ratios (P/Es) and high-growth stocks at valuations that have fallen from stratospheric and now normal, if not yet undervalued, levels.
Companies continue to invest in software and hardware solutions to higher labor costs, and many firms have “fantastic” balance sheets, he says.
Take Advanced Micro Devices (AMD(opens in new tab), $71.59), a leading semiconductor manufacturer. Analysts have mixed ratings on AMD as the economic slowdown and negative investor sentiment are near-term headwinds.
Shares have fallen roughly 50% from their 52-week highs and now trade at 16 times expected earnings for the next year — more than half of typical price-earnings over the past decade.
Still, analysts expect an average 25% jump in annual earnings over the next three to five years, according to S&P Global Market Intelligence, ahead of the company’s peers, fueled in part by market-share gains for its data-center chips (sales). up 45% in the most recent quarter compared to the previous year). Vijay Rakesh, an analyst at Mizuho Securities USA, rated the semiconductor stock a buy and recently set a 12-month price target of $95 on the stock.
Market value: $38.6 billion
Dividend Yield: 1.1%
Halliburton (HAL, $42.53) is one of the world’s largest energy services companies, with more than 40,000 employees and operations in more than 70 countries, according to Argus Research (opens in new tab). It supplies products and services to assist in energy exploration and production, from locating oil to constructing and completing a well to managing geological data.
Oil was already in short supply as the global economy opened post-pandemic; Then came the war in Ukraine. Halliburton benefits as oil companies increase production.
Geoffrey Miller, Halliburton’s CEO, told analysts it was entering a “multiyear upcycle,” according to the Argus. The investment-research firm expects Halliburton to generate strong free cash flow in the coming quarters, and the company has tripled its dividend in January 2022.
Shares trade at 15 times forward earnings estimates, below the five-year average of 26.5.
Market value: $11.1 billion
Dividend yield: N/A
DECKER’S OUTDOOR (DECK, $420.00) may be known for its Uggs brand of cozy sheepskin footwear, but analysts at BofA Securities believe the small-to-midsize company’s crown jewel is running its HOKA brand. Boots, (pun intended?) with “a clear runway for growth.” BofA expects HOKA brand sales to double to $2.2 billion in fiscal 2025 (ending March 31). Total company revenue for fiscal 2022: $3.2 billion.
Uggs is Deckers’ biggest business, though, with high dividends and strong cash flow. The brand has a good chance of seeing its popularity peak in the epidemic era.
BofA likes DECK’s historically conservative management team, which has a strong track record of beating expectations. In short, analysts say Deckers is “a high-quality stock with a strong growth trajectory.”
Rexford Industrial Realty
Market value: $10.8 billion
Dividend Yield: 2.2%
Real estate investment trusts (REITs), among the most interest-rate-sensitive industries, have fallen roughly 20% over the past year.
“The recent sell-off is overdone,” say analysts at investment firm Stifel. You may still be hesitant to invest in office parks or shopping malls, but according to Stifel, industrial REITs that provide warehousing and logistics services offer an opportunity for growth at reasonable prices.
The firm initiated Rexford Industrial Realty (REXR(opens in new tab), $58.57) in mid-October with a buy rating and a 12-month price target of $64. While Rexford focuses on just one huge market — Southern California, which is the largest industrial market in the U.S., according to Stifel, the firm’s “deep roots and long history” give the team a better sense of market demand within the region, analysts say, adding that the lack of available space allows Rexford to raise average rental rates. . Rexford’s balance sheet is solid; Shares yield 2.2%.
Market value: $181.9 billion
Dividend Yield: N/A
T-Mobile US (TMUS, $146.10) It is the second largest wireless carrier in terms of market share. But it is ahead of others in terms of growth, says analyst Keith Snyder at investment research firm CFRA. “Our Strong Buy recommendation reflects our expectation that T-Mobile will continue to outperform peers,” he says. Snyder says the rollout of T-Mobile’s 5G network is at least 12 months ahead of both Verizon ( VZ ) and AT&T That, and aggressive phone plan pricing, “has enabled T-Mobile to capture market share while competitors struggle to keep up,” he says.
Furthermore, the carrier is on track to double its share of the large-business and government market from less than 10% to nearly 20% in five years. CFRA expects earnings to jump from an estimated $2.27 in 2022 to $6.40 in 2023; Shares could see $175 within 12 months.
Market value: $42.8 billion
Dividend Yield: N/A
Workday (WDAY, $166.69) is a leader in cloud-based software for human-resource management.
“It’s really been able to carve out a strong position based on its patented technology,” says Lori Keith, co-manager of the Parnassus mid-cap fund. Half of the Fortune 500 use its platform. And once established, customers stick – Workday has a customer retention rate of 95%.
Like most tech stocks, WDAY is down more than 34% over the past 12 months. And Workday isn’t very profitable — it made a small profit last fiscal year (ending in January). But analysts expect a turnaround in 2024 from roughly 20% revenue growth in 2023 and 2024.
Investors looking for the best stocks to buy in 2023 might consider holding for more than a year: Keith says he sees “significant market-share opportunity” for Workday, and over the next three years, the stock’s potential reward outweighs the risk.
Market value: $7.1 billion
Dividend Yield: 0.7%
Matador Resources (MTDR, $59.97) is an oil and gas exploration and production company that has risen along with its fellow energy stocks over the past 12 months. Specifically, MTDR stock is up more than 32% year-to-date.
Analysts think there is more room to run. The consensus price target is $71.77, representing an upside of about 20% over the next 12 months, according to S&P Global Market Intelligence.
With its impressive growth on the charts, MTDR is one of the best values in this list of best stocks to buy in 2023. Shares currently trade at just 6.4 times forward earnings, below Matador’s five-year average of 11.7%.
What’s more, Matador is a bridge to a time when the natural gas business is fueling more renewable electricity. We need that gas for the next 20 or 30 years.
Market value: $279.8 billion
Dividend Yield: 2.6%
Why is Merck (MRK, $110.45) on this list of the best stocks to buy in 2023? The pharmaceutical giant has been known for its high revenues over the past decade. Analysts are bullish on MRK, as evidenced by the consensus rating of Buy. Of the 26 analysts who follow Merck tracked by S&P Global Market Intelligence, 12 say it’s a strong buy, six call it a buy and eight have it a hold.
Speaking for the bulls is Credit Suisse analyst Trung Huynh, who has an Outperform (Buy) rating on MRK. “The change is underway with a new management team, which faces the patent expiration of its key asset, Keytruda, by year-end 2028,” Huynh writes in a note to clients. “However, MRK’s high, consistent earnings growth, which is significantly higher than peers, is key to outperformance over the next few years.”
And for investors looking for good defensive stocks, Huynh says MRK’s growth is “low risk,” and cancer drug Keytruda and HPV vaccine Gardasil are “better positioned and less impacted by health care reforms under the Inflation Reduction Act (IRA) than peers.”
Market value: $41.3 billion
Dividend Yield: N/A
Lululemon Athletica (LULU, $323.82) is a leisure apparel retailer. While the stock is down 3.3% over the past 12 months, comparable-store sales rose 22% in the last reported quarter compared with a year earlier. Rarely can you buy such a fabulous company at such a depressed price.
The stock is currently trading at 28 times forward earnings. At first glance, it certainly looks pricey, but not much compared to the five-year forward P/E ratio of 43.
Argus Research analyst John Staszak definitely believes that LULU is one of the best stocks to buy for the long term. “Lululemon has a strong brand and direct-to-consumer sales, which we expect will lead to higher margins over the next several years,” the analysts wrote in a note. Despite the headwinds, we expect the company’s momentum to continue.” He adds that LULU’s sale creates a “buying opportunity” and Consumer Discretion has a long-term buy rating on the stock.
2023 promises to be an exciting year for investors with several promising stock options to choose from. Among the many stocks available in the market, Amazon, AMD and Halliburton stand out as some of the best options to consider. With Amazon leading the e-commerce industry, AMD providing cutting-edge technology solutions, and Halliburton being a major player in the energy sector, these companies are well-positioned for long-term growth. However, it is important to note that investing always comes with risk and it is essential to do thorough research and seek professional advice before making any investment decisions.