Top 10 Stocks to Buy in 2023
By The Headlines, December 27, 2022 | 12:26 PM
The decrease in the stock market is an opportunity to buy these stocks at a low price.
In 2022, inflation increased and interest rates skyrocketed. This led to fears of a recession and a widespread negative sentiment in society. The S&P500 lost 19.8% through December 27, with an Inverse Head and Shoulders on the Daily chart showing a possible bounce back. In the technology sector, stocks took a nose dive and energy companies increased their market value amid escalating prices for commodities and as the Russia-Ukraine war disrupted oil prices around the world.
The rapid rotation of growth stocks mixed with a number of sell-offs in 2023 left some opportunities on the table. You can now get shares at a discounted price for great companies, which offer both growth and stability in the long term. Most investors usually try to buy stocks when the market is rising, but picking up stocks in a downturn is actually a good practice. Here are 10 of the best stocks to pick up for 2023.
- Walt Disney Co. (DIS)
- Apple Inc. (AAPL)
- Amazon (AMZN)
- PayPal Holdings Inc (PYPL)
- Taiwan Semiconductors Manufacturing Co. Ltd. (TSM)
- Tesla (TSLA)
- Citigroup Inc (C)
- Standard Chartered PLC (STAN)
- American Airways (AAL)
- United Airlines (UAL)
Walt Disney Co. (DIS)
One of the most important things to consider when looking at stocks to invest in is how experienced and committed the company's management team is. Given that Disney's co-founder, Bob Iger, is still CEO, there's no shortage of experience here.
Considered by many to be one of the greatest CEOs that this century has seen, Iger presided over a series of hugely successful acquisitions such as Pixar, Marvel Entertainment and Lucasfilm before passing the CEO role to Bob Chapek in February 2020.
Chapek faced a series of challenges including COVID-19 and high inflation. He attempted to inspire Disney employees, waded into cultural controversies and might have overspent on content for the streaming service Disney+.
Disney shares have been down for over three years, so no one is better equipped to initiate a turnaround.
Apple Inc. (AAPL)
One of the largest publicly traded companies in the world is Apple. Apple shares had a tough go of it in 2022, as people feared a recession and interest rates went up.
Apple just had a selloff and currently trades at levels that give investors a sound entry point. The company is valued at $2.2 trillion and its phones are in use all over the world, beating iPhone rivals by a mile.
Apple's incredibly sticky ecosystem – customers tend to stay with Apple products, which integrate seamlessly with one another – and its ability to upsell more advanced smartphones year after year lends its revenue a degree of predictability and stability.
While its 0.7% dividend is not incredible, the company is committed to giving back to its shareholders by increasing dividends and share buybacks. In 2018, AAPL spent about $90 billion on stock buybacks.
Amazon is looking good as its shares are 52% cheaper than they were a year ago. The online retailer has been suffering from cost inflation and other problems related to the tight labour market, supply chain and dwindling profits.
Amazon has been doing quite well despite being accused of abuse on the market. Its revenue partly consists of its successful cloud services, which have an annual revenue run rate of about $84 billion, and is quickly increasing.
As AWS gets more sales, it is anticipated to collect 10 times the growth. If AWS is worth $840 billion, investors are getting Amazon Prime, digital advertising, and all of the company's other elements for just $60 billion.
PayPal Holdings Inc (PYPL)
PayPal, a well-known and profitable financial stock, is now worth less than it was before the 2018-2020 pandemic. While earnings are predicted to be even higher than in any of those years, the company's share price has dropped.
Shares have taken a major hit over the past year, losing 64.5% through 27 December due to weaker macro conditions and the loss of its highly profitable connection with eBay Inc. (EBAY).
Even though this share has a five-year average P/E ratio of 38, it now trades at 15 times its expected 2023 earnings. Over the past five years, PayPal's lowest P/E ratio has been 20.3, which means its share price should be worth $96 by early 2024. This gives it an upside of more than 37% over the next 12 months.
PayPal has partnered with major players like Apple Pay and Amazon to continue its expansion in the retail industry. It is now accepted in many physical stores, as well as online with Amazon.
Taiwan Semiconductors Manufacturing Co. Ltd. (TSM)
$400 billion Taiwanese company TSMC is next on the list. They have over 90% of the market share for advanced chips and are dominant in this space.
Apple has been shifting its supply chain away from China and TSM is a big customer of theirs. The response to federal incentives for domestic chip manufacturing led to TSM recently committing to building a second plant in Arizona.
TSM has a market capitalization of $1.2 billion, trades at 13 times future earnings, yields 2.2% and is admittedly another Buffett investment. As of its most recent quarterly disclosure, Berkshire's stake in the company was worth about $4.1 billion.
Tesla's share price has gone down 65% from what it was in 2022. CEO Elon Musk had to divert his attention to the acquisition of Twitter, and this meant that Tesla was faced with different dynamics in the two markets they serve. But both are large challenges for the company.
Tesla is by far the most profitable electric car manufacturer out there due to its high-end vehicles. However, we believe new manufacturers in the market might threaten that position as they start to create more affordable models.
While recent share price weakness might be a bad omen for some, long-term investors should take advantage of the opportunity to buy low and reap sizable profits in the future.
Citigroup Inc (C)
Citigroup, a multinational bank from the United States, dividends 4.4% to its shareholders, proving to be a buffer for them. This dividend is sustainable and can only increase over time. Citigroup also looks like a great value stock at the moment, it trades for less than 7 times forward.
Warren Buffett, a world-renown investor and financial guru, has been buying Citigroup's shares. He started acquiring the stock in the first quarter of 2022, with Berkshire Hathaway Inc. (BRK.A, BRK.B) owning a roughly $2.3 billion stake in the company at the end of the third quarter.
Standard Chartered PLC (STAN)
Investors often buy stocks without analyzing the profitability of companies or any type of financial information. But if a company has had losses for several years straight, that's a sign that it may be time to sell. A loss-making company has yet to turn a profit, and eventually, the inflow of external capital may dry up.
Despite being in an age of tech-stock, blue-sky investing, many investors prefer a more traditional strategy; for example buying shares in profitable companies such as Standard Chartered (STAN). Raising profitability is really important, but it's not the only thing you need to succeed in business.
Standard Chartered's earnings have been on the rise. Not only that, but insiders also own a significant stake in the company and have been buying more shares. The quality of this company seems to be increasing and at the same time, it looks like this might be a good time to invest. Risk always has to be considered though.
American Airlines (AAL)
The AAL stock has been recovering from lows that were caused by the coronavirus crisis, as new routes are being opened up and it is also battling airline fuel costs. Passenger volumes at U.S. airports have been 6% higher than a year ago & roughly 5% below pre-pandemic levels so far. This is anticipated to increase in 2023.
It's clear that demand remains strong, and American Airlines feels confident given their customers' reactions post-pandemic. Analysts surveyed by Zacks Investment Research expect AAL will make 55 cents a share.
Low-cost airlines are competing with higher-fare carriers which could change the industry in other ways. American Airlines is competing harder and expanding to new routes in order to attract more leisure travellers. These routes are focused on destinations that appeal to an outdoor lifestyle.
United Airlines (UAL)
United Airlines has a Zacks Rank of 2 (Buy), an A VGM Score, and increasing estimate revisions. The combination of these factors warrants an investment over the long term.
United Airlines is performing better than expected and for the fourth quarter of 2022, analysts estimate that earnings have increased more than 100% year over year. We hope that in 2022, United Airlines will also exceed these expectations by increasing more than 100%.
It has a surprisingly impressive earnings history. The company's average earnings are 7.77% higher than expected in the last four quarters, on average. With an expected 100% EPS growth in the fourth quarter of 2022, United Airlines looks like a powerful long-term buy. Thumbs up! The company's EPS estimates for the coming years look promising too.
United Airlines is now back on track and gaining ground in the domestic and leisure areas. Multiple profitable quarters have proven their continued improvements under the new CEO.
Management believes that air travel demand and pricing trends will remain strong and predicts a 10% operating margin for the December-end quarter, which is above the 2019 levels without the effects of last year's virus.
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