With a possible recession still looming amid the ongoing bear market, investors are wondering which stocks to place their bets on. The analyst community expects volatility to continue in the near term due to inflation, increasing interest rates and geopolitical unrest. Needless to say, it’s important to keep a close eye on the market and make your own judgments.
Investment opportunities can come from many different sectors, and you should remain vigilant to find the best investment options for you and avoid expensive mistakes. If you’re looking to buy stock in 2023, here’s what you need to know.
Top 10 Stocks To Consider in 2023
Here’s a quick list of the top stocks to buy this year:
- Lithia Motors Inc. (LAD)
- Travel + Leisure Co. (TNL)
- Mueller Industries Inc. (MLI)
- First BanCorp (FBP)
- Micron Technology Inc. (MU)
- Devon Energy Corp. (DVN)
- Marathon Oil Corp. (MRO)
- Qualcomm Inc. (QCOM)
- Berkshire Hathaway Inc. (BRK-A)
- Herc Holdings Inc. (HRI)
Stocks With Growth Potential
When companies have a strong leadership team, strong sales, a large audience and a good growth market, they offer solid long- and short-term opportunities for investors. Here are some to consider investing in as 2023 begins.
1. Lithia Motors Inc. (LAD)
Lithia Motors is a U.S. automotive retailer that operates 282 stores and sells products via hundreds of websites. In addition to selling new and used domestic, foreign and luxury vehicles and related financial, warranty and insurance services, Lithia operates auto maintenance and repair services and sells parts under the brand names Driveway and Green Cars.
The company covers all the automotive market bases — buyers and those priced out of the auto market who’ll have to repair their existing cars instead of replacing them.
2. Travel + Leisure Co. (TNL)
Formerly known as Wyndham Destinations, Travel + Leisure is a hospitality products and services company that operates vacation ownership and travel and membership segments in the U.S. and internationally. The company benefited from a return to travel last year, with vacation ownership making an especially strong showing.
In its third-quarter 2022 financial results, the most recent reported, Travel & Leisure noted that sales volume per guest attending timeshare/vacation club tours was up 45% compared to 2019, “demonstrating the strength of leisure travel and the strong desire for new and existing timeshare owners to buy, use, and upgrade their membership,” said Michael D. Brown, president and CEO of Travel + Leisure Co., in a press release.
3. Mueller Industries Inc. (MLI)
Mueller Industries manufactures and sells aluminum, brass and copper, as well as plastics, in North America, the U.K., the Middle East and China. The Tennessee-based company was founded in 1917. Its operating segments include piping, industrial metals and climate.
A strong third quarter has helped Mueller shares remain relatively stable, and analysts say the mid- and long-term outlooks are positive. They rate the stock a “strong buy” and call it undervalued — not surprising given its low 5.85 P/E ratio.
4. First BanCorp (FBP)
First BanCorp is the holding company for FirstBank Puerto Rico, which serves retail, commercial and institutional clients. The company’s quarterly and annual earnings and revenue results have been solid of late, and the stock pays a dividend yield of 3.63%.
Analysts rate FBP a “buy.” Their average price target is $16.80.
5. Micron Technology Inc. (MU)
Micron stock has taken a hit over the last year, but it checks a lot of boxes as stock with growth potential, including a low price-earnings ratio and an average 12-month target price more than 13% above the current price.
Thirty-one analysts following the stock have a consensus rating of “buy.” Their average price target is $64.17 in a range of $45 to $100.
Stephen “Sarge” Guilfoyle, Real Money columnist for TheStreet, believes that “demand for what Micron does will outpace supply and/or capacity for some time.” As for Micron’s financials, Guilfoyle noted that the “balance sheet is as clean as a whistle and gets high marks on the Sarge test.” That’s why some analysts say Micron is oversold and poised for serious gains.
To measure stock performance, analysts and investors should take into account the stock’s potential and ability to increase its shareholders’ wealth during an estimated period. Here are some of the best-performing stocks to keep an eye on.
6. Devon Energy Corp. (DVN)
This company’s stock has performed well due to its capital return for shareholders, its outstanding financial performance and geopolitical conditions that sent energy stocks soaring.
In June 2022, Devon announced that it had entered into an agreement to purchase leasehold interest and other assets of RimRock Oil and Gas. The acquisition was expected to increase Devon’s Williston Basin production by an average of 20,000 barrels of oil per day and add over 100 undrilled inventory locations, according to a July 21 press release.
7. Marathon Oil Corp. (MRO)
Shares of MRO have advanced nearly 45% over the past year, while the S&P 500 has lost considerable ground. The effects of the Russian invasion of Ukraine are certainly a factor, driving share prices to just below their 52-week high before falling back some in June 2022 — only to soar even higher in November.
A great deal of uncertainty exists around the short-term energy outlook, according to the U.S. Energy Information Administration, and shares are down since the November 2022 rally. But analysts still recommend MRO as a “buy.”
When considering a stock, value investors tend to choose those trading for less than what they’re worth. The strategy includes measuring fundamental business metrics against the stock price with the hopes the price will rise alongside the company’s worth. Here are some of the best value stocks for 2023.
8. Qualcomm Inc. (QCOM)
Qualcomm is a major player in the wireless industry and a leader in the 5G and chipset market. While not without competition nipping at its heels, Qualcomm is a blue-chip stock with a 10-year history of increasing dividends, and analysts say it’s significantly undervalued right now, trading at 10.55 times earnings.
According to the company’s Q4 2022 earnings report, for the three months ended Sept. 25, 2022, earnings rose 6% while revenue jumped 22% year over year. Revenue and profits were up 32% and 43%, respectively, for the 2022 fiscal year.
9. Berkshire Hathaway Inc. (BRK-A)
It might seem counterintuitive that the world’s most expensive stock could be considered a good value, but consider this: Berkshire Hathaway is a holding company for businesses representing dozens of brands in industries as diverse as insurance, freight rail transportation, utilities, furniture, confections, batteries and recreational vehicles, to name a few, and it’s helmed by one of the world’s most successful value investors.
Diversified earnings and excellent management bode well for patient investors. Plus Berkshire Hathaway is flush with cash it can use to gobble up growth stocks and buy back shares, Seeking Alpha noted.
Berkshire Hathaway shares are up 2.63% since the beginning of the year. Of course, most will have to buy a fractional share of the stock, which trades at just over $476,000 as of Jan. 17, or pick up budget-priced Class B shares of Berkshire Hathaway for about $315.
10. Herc Holdings Inc. (HRI)
Herc Holdings is a Florida-based equipment supplier that rents out aerial equipment; air compressors; compaction, earthmoving and material handling equipment; trucks and trailers; and lighting equipment. It also provides equipment maintenance, repair, training and labor, among other services.
Yahoo Finance considers HRI undervalued and projects a 31% annual return for investors who buy now and hold the stock for five years.
Analysts rate the stock a “strong buy” with an average price target of $159.88.
The stock market is in constant evolution, and those looking to invest need to pay close attention to its frequent ups and downs. When looking to invest in new stocks and diversify your portfolio, do your research and evaluate what’s best for you in the long run.
The guide above is meant to give you some insight into some of the best options in the stock market nowadays. Be aware that these conditions may vary over time.
Good To Know
Experts recommend investing in stocks over bonds if your goal is growth and you have a strong appetite for risk. Although stocks are more volatile than bonds, historically, they have produced larger long-term gains. If investing in individual stocks is too risky for you, consider a mutual fund that invests in a basket of growth stocks.
Stock Investment FAQHere are the answers to some of the most frequently asked questions about investing in stocks in 2023.
- How do you pick stocks?
- When picking stocks, the main goal is often to find good value. If you're looking to diversify your portfolio, look for trends in earnings, company strength, debt-to-equity ratios and dividend yield.
- What are the best industries to invest in right now?
- The current global situation has drawn attention to many industries that hadn't been on investors' radar in previous years. Some of the best industries to put your money on nowadays are:
- – Artificial intelligence
- – Cloud computing
- – Green energy
- – Virtual reality
- – Sustainable industries
- – Transport
- – Cybersecurity
- – Pharma and healthcare
- – Biotechnology
- How do I buy stocks?
- You can buy stock through an online stockbroker, a full-service broker or directly from the company. While you don't need a broker to buy stock, having a middleman could give you more options and simplify your life when investing.
Data is accurate as of Jan. 17, 2023, and is subject to change. Information on analyst ratings was sourced from Yahoo Finance.