Stock picking for 2023 could be overwhelming, especially in a volatile market. After all, with economic factors changing by the minute and macroeconomic conditions becoming increasingly unpredictable, finding a winning stock can seem downright impossible. However, with a thorough research process featuring robust analysis and data-driven insights, it is possible to identify stock picks for 2023 with a high potential for significant gains over the next few years.
One thing that’s undeniable is that the year 2022 was not a great year for stocks. The markets cooled off because of record-breaking inflation and the Fed’s hawkish moves. The S&P 500 is down by double digits this year, and it does not look like the index will close in the black before it’s all said and done. But for a section of investors, this is the ideal time to pursue stock picks for 2023 because they are trading at a huge discount. In fact, by carefully considering both short-term trends and long-term prospects, investors can create an investment portfolio with the most potential to outperform in 2023.
Picking stocks for 2023 should involve careful consideration of current market trends and long-term forecasts before making any speculative investments. By taking measured risks and exercising wise judgment with stock picks for 2023, investors can maximize their returns while minimizing their risk exposure in what could be the volatile economic landscape of tomorrow. With that in mind, let’s look at seven stock picks for 2023 with the potential to power your portfolio in 2023.
| T | AT&T | $18.94 |
| CVS | CVS Health | $100.73 |
| NIO | Nio | $10.52 |
| ETSY | Etsy | $120.87 |
| SHOP | Shopify | $37.29 |
| AMZN | Amazon | $91.76 |
| TSLA | Tesla | $180.74 |
AT&T (T)
AT&T’s (NYSE:T) financial performance is consistently impressive, including the latest quarter, which outperformed analyst estimates. It was a step in the right direction after a couple of disastrous years where investors had to suffer through AT&T’s ill-fated foray into entertainment.
After divesting from DirecTV and streaming platform WarnerMedia to Discovery, the company is focusing on its core expertise. The moves have been beneficial, with the company showing a solid performance after that. AT&T is a worthy investment, as the company is always looking for opportunities to benefit shareholders in the short and long term. One of their most promising strategies currently focuses on 5G technology, a network connection that promises to increase connected devices’ capabilities exponentially. By taking an aggressive stance on this technology, AT&T is well-positioned to take full advantage of its power.
In addition to providing advanced hardware and services to customers, their commitment should help drive significant profits in the future. With the stock price currently undervalued by many analysts, it creates an even more lucrative opportunity to invest in this global leader. There’s no telling where AT&T will be a few years later, but owning shares now could lead to hefty rewards once the 5G market matures. All told, AT&T may be one of the strongest stock picks for 2023 you can purchase at these prices if you’re looking for an advantageous long-term hold.
CVS Health (CVS)
CVS Health (NYSE:CVS) is a major player in the healthcare industry, offering products and services that range from pharmacy benefits management to retail pharmacy chains and insurance services. The company’s financial health has been trending upward for some time now, an impressive accomplishment given the often turbulent nature of the healthcare field. Despite this positive momentum, CVS Health shares are still down this year. It makes the healthcare giant undervalued, and one of the top stock picks for 2023.
In the third quarter, revenue jumped 10% versus the year-ago period, with healthcare benefits and pharmacy service segments growing by 9.9% and 10.7%, respectively. However, it stumbled to a loss per share of $2.60, compared to earnings per share of $1.20 in the year-ago quarter. The loss stems from a $5.2 billion pre-tax opioid litigation charge and a $2.5 billion pre-tax loss from Omnicare’s long-term care pharmacy business during the quarter. CVS is looking to sell Omnicare because it is no longer considered a strategic asset.
CVS has a long and storied history of asset acquisition and increased service offerings. The company has been strategic in its choice of acquisitions, always looking for ways to expand its portfolio and income streams. Its most prominent acquisitions include MinuteClinic, Coram, and Aetna. These acquisitions allow CVS to branch out into new industries, such as healthcare and insurance. By diversifying its business model, CVS is positioning itself for continued success in the years to come.
With an aging population, the health company’s insurance and medicare business and the pharmacies should continue to flourish. CVS also regularly pays dividends to stockholders to add more to its sheen. Overall, the stock is somewhat undervalued and should be an excellent option from the medium to long term.
Nio (NIO)
NIO (NYSE:NIO) has been working hard to overcome the damage that the COVID-19 pandemic has caused to its business. The company, which specializes in electric vehicles and operates primarily in China and Europe, was forced to put its manufacturing operations on pause due to lockdowns.
This cost the company greatly. However, NIO has since recovered from this slump and is confident it will provide a much higher number of vehicles to consumers by the end of the fourth quarter. Despite challenges related to supply chain disruption, testing delays, production issues, trade friction between China and the U.S., etc., NIO remains committed to producing high-quality products for customers worldwide.
The company also plans on launching more new models to meet the increasing global demand for electric vehicles. With its focus on innovation and customer service, along with aggressive expansion plans across Europe and beyond, NIO is well poised for growth despite its current challenges, which have been amplified due to the ongoing pandemic.
Etsy (ETSY)
Etsy (NASDAQ:ETSY) is an online marketplace that enables people to sell handmade products. The business has gone well over the years thanks to a surge in sales during the pandemic. Over the years, the company has evolved considerably and moved from just physical products to digital assets, which add considerably to its revenue.
It recently posted a third-quarter loss of $963.1 million due to a goodwill impairment charge of $1.04 billion associated with two acquisitions. That, coupled with high inflation, resulted in the stock losing significant steam. However, this is a one-time event and does not have any significant bearing on the long-term investment thesis of this stock.
On the bright side, the e-commerce giant delivered yet another earnings beat. Third-quarter revenue grew 11.7%, despite the macroeconomic headwinds. Etsy has forecast fourth-quarter revenue of $700 million to $780 million and gross merchandise sales of $3.6 billion to $4 billion. Rosy guidance is something investors are looking for when it comes to judging e-commerce stocks these days. Heading into the holiday season, this was just the tonic Etsy needed.
Shopify (SHOP)
Shopify (NYSE:SHOP) is another battered tech stock that deserves special attention. Among stock picks for 2023, the e-commerce giant represents a unique case. Unlike several other tech companies, Shopify is doing quite well for itself.
Shopify had a tough year in 2022, but fortunately, Q3 saw a massive improvement. Revenue and GMV were up, and loss per share was less than expected. Shopify also boasts a three-year revenue compound annual growth rate (CAGR) of 52%. This means that it is still growing at a rapid pace, despite the challenges of the past year.
In addition, Shopify’s Black Friday sales were a success, as it reported $3.36 billion in sales, a record for the e-commerce giant. Sales were up 17% year on year, and the peak time of this event was 12:01 PM EST when Shopify merchants witnessed sales of more than $3.5 million per minute. With such impressive performance, no wonder CEO Tobias Lutke reposed confidence in the company, picking up 282,942 shares for $10 million at $35.34 apiece. The purchase came soon after the Q3 result announcement and is the second time he has invested in company shares.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) stock is often a sure-shot winner during most times. However, like other tech stocks, the e-commerce giant is in trouble this year. Much is thanks to macroeconomic headwinds. But investors will also point to the slowing global economy. Due to the selloff, Amazon’s market cap fell under $1 trillion for the first time since April 2020.
While the U.S. economy might not be doing so well, Amazon has managed to maintain a steady presence within it. The company is expanding despite a few challenges this year, such as soaring inflation and high-interest rates, largely due to a struggling economy.
However, one of the bright spots is Amazon Web Services (AWS). At the end of the quarter, AWS held an industry-leading 34% market share in the global $217 billion cloud computing industry, with Microsoft’s Azure second, at 21%. Cloud computing is the only profitable segment for Amazon in the third quarter. It rose by 27% year-over-year and generated $5.4 billion in operating income in Q3.
Overall, Amazon’s third-quarter report was disappointing as it could not grow as rapidly as investors would have liked. The e-commerce giant also issued muted fourth-quarter guidance. It did not sit well with investors, and the stock tanked. But this is Amazon we are talking about. It is just a matter of time before it is up and running again. But before that happens, adding this one to your portfolio at a discount is important.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) had a really good first few months this year. It delivered sustainable, healthy growth, and price momentum was steadily moving upwards. But then things hit a bit of a snag. TSLA stock is down by 50% this year, and more pain could be on the way.
The dour short-term outlook is that Elon Musk is focusing heavily on revamping Twitter. With most of its efforts now focused on this area, it is no surprise that TSLA investors are concerned. CEO Elon Musk sold 19.5 million shares of Tesla right around the time the big Twitter deal was announced.
At the same time, E.V. stocks generally have been sliding. The rout has more to do with the general bearishness worldwide than anything specific E.V. companies are doing or suffering from. Tesla is doing exceptionally well this year, and the trend continued in the third quarter. It announced it saw record revenue and profits, despite the inflation and strengthening U.S. dollar.
Tesla expects its car deliveries to grow by an average of 50% over the next few years. This ambitious target is achievable thanks to Tesla’s significant production capacity and strong cash position, which is more than $21 billion as of Q3. This cash infusion will give Tesla the resources it needs to invest in new products and technologies, expand its manufacturing capabilities, and support its global expansion plans. As a result, Tesla is well-positioned to continue its impressive growth in the years to come.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.