Hello Alpha Investors,
Today we are adding first batch of stocks to our Portfolio 2023.
In past two years investors experienced roller coaster ride in equity market. Many short traders or investors blown away their portfolios and many made fortune shorting the stock market.
Be ready for anything in 2023, if you keep long term perspective and stick to your investing rules 2023 could be a year of opportunities.
Finding best stocks in 2022 was a pain, specially if you avoid oil/energy stocks. Tech sector saw serious decline and revaluations, due to higher interest rates.
In 2023 investor will need to be brave and patient. There is a saying that you can not move from one bear market to bull market, without going through a recession first.
Russ Koesterich, Portfolio manager of BlackRock Global Allocation Fund is anticipating a mild recession. He said "Given strong household balance sheets and resilient consumption, our base case is that it will be a mild recession". He also added "There is a strong likelihood that US will enter a recession in 2023".
Given all that macro economic conditions, where should investors look when seeking out the best stocks to buy for 2023?
Key is to avoid unprofitable high growth companies and resist your urge to buy beaten down stocks.
Here at Alpha Investor, we use Stage Analysis to filter stocks, and focus on earnings consistency and revenue growth to select our stocks.
We will look beyond utilities and consumer staples stocks which are likely expensive today and focus on Healthcare, Finance, Profitable Tech and Small camps.
Small caps and some Value Indexes are showing signs of relative strength.
Keeping all of these on mind, here are 10 of the best stocks to buy in 2023.
Shopify Inc : Buy between $30 to $40
Current Price : $37
Pays Dividend : No
Market Cap : $40B
Max Analyst Target : $60
Net Income growth: Negative in 2022 (ttm), 812% in 2021
Basic EPS growth: Negative in 2022 (ttm), 784%% in 2021
Stop Loss at: $23
Shopify, Inc. operates a cloud-based commerce platform designed for small and medium-sized businesses. Its software is used by merchants to run business across all sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops. The firm's platform provides merchants with a single view of business and customers and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting. It focuses on merchant and subscription solutions. The company was founded on September 28, 2004 and is headquartered in Ottawa, Canada.
Shopify is consolidating in 2022, after massive growth and valuation in 2021 and mega fall in stock price this year.
Shopify is expected to post good results in 2023 and beyond. We should have some exposure of e-commerce in our portfolio.
Shopify has potential to grow it's earnings and become profitable by 2025
Lattice Semiconductor Corporation ($LSCC): Buy between $50 to $65
Current Price : $65
Pays Dividend : No
Market Cap : $8.7B
Analyst Target : $74
Net Income growth: 60%% in 2022 (ttm), 102% in 2021
Basic EPS growth: 60% in 2022 (ttm), 100% in 2021
Stop Loss at: $44
Lattice Semiconductor Corp. designs, develops and markets programmable logic products and related software. The company includes semiconductor devices, evaluation boards, development hardware, and related intellectual property licensing, services, and sales. It provides smart connectivity solutions powered by its low power FPGA, video ASSP, millimeter wave, and IP products to the consumer, communications, industrial, computing, and automotive markets. The company was founded in 1983 and is headquartered in Hillsboro, OR.
Based on the above chart you can see LSCC formed a nice stage 1 base and is moving to stage 2 after breaking out from 30 week moving average on weekly. As long as it trade above the support trendline above $45, we can hold LSCC in our portfolio 2023.
Pactive Evergreen Inc ($PTVE): Buy between $10 to $12
Current Price : $11.80
Pays Dividend : 3.54%
Market Cap : $2B
Analyst Target : $14
Net Income growth: 1400% in 2022 (ttm), 156% in 2021
Basic EPS growth: 1300% in 2022 (ttm), 146% in 2021
Stop Loss at: $8
Pactiv Evergreen Inc. is a manufacturer and distributor of fresh foodservice and food merchandising products, and fresh beverage. The firm produce a broad range of products that protect, package and display fresh food and beverages for consumers who want to eat or drink fresh, prepared or ready-to-eat food and beverages. It operates through the following segments: foodservice, food merchandising and beverage merchandising. The company was founded on May 30, 2006 and is headquartered in Lake Forest, IL.
$PTVE recently broke out of downtrend and continue trading above 3o week moving average. Based on that PTVE has potential to start Stage 2 from here.
PTVE in last two years has significantly grown net income and became profitable.
Net Income increased 156% in 2021 from -41M to 23M and it's TTM net income this year is 323M whopping 1400% increase.
It has grown Basic EPS in 2021 for about 146% and in TTM basic EPS in 2022 is grown more than 13 fold.
We are adding PTVE to our portfolio as initial position of less than 1% of total portfolio.
Photronics, Inc. ($PLAB) : Buy between $14 to $20
Current Price : $16.65
Pays Dividend : No
Market Cap : $1B
Analyst Target : $26
Net Income growth: 114% in 2022 (ttm), 63% in 2021
Basic EPS growth: 117% in 2022 (ttm), 73% in 2021
Stop Loss at: $13
PLAB manufactures and sells photomask goods and services in the United States, Taiwan, Korea, Europe, China, and globally. The business sells photomasks that produce integrated circuits and flat panel displays (FPDs). It offers its goods to foundries, designers, and producers of semiconductors and FPDs.
For the fiscal 2022 fourth quarter ended October 31, 2022, PLAB’s revenue increased 16% year-over-year to $210.27 million, while its gross profit came in at $80.27 million, a 54.5% increase from the prior year’s quarter. The company’s operating income was $60.54 million, an 80.6% rise from the previous year’s quarter.
Furthermore, PLAB’s net income increased 93% year-over-year to $55.26 million, and its EPS stood at $0.60, an 81.8% rise from the prior year’s quarter.
PLAB is in Stage 3 basing and can continue to base here and again start Stage 2 or it can start Stage 4 decline, but it's profitable, net income is growing at amazing rate and it is increasing basic earnings per share.
As long as it stays above $14, we keep this in our portfolio.
Koniklikjke Philips NV NY Registry Shares ($PHG): But under $16
Current Price : $16.26
Pays Dividend : 5%
Market Cap : $13.7B
Analyst Target : $29 (max target)
Net Income growth: minor decline in 2022 (ttm), 189% in 2021
Basic EPS growth: minor decline in 2022 (ttm), 192% in 2021
Stop Loss at: $12
PHG is a technology company, which engages in the healthcare, lighting, and consumer well-being markets. It operates through the following segments: Diagnosis and Treatment businesses; Connected Care businesses; Personal Health businesses; and Other. The Diagnosis and Treatment businesses segment consists systems, smart devices, software and services, powered by AI-enabled informatics-that support precision diagnoses and minimally invasive procedures in therapeutic areas such as cardiology, peripheral vascular, neurology, surgery, and oncology. The Connected Care businesses segment consists Hospital Patient Monitoring, Emergency Care, Sleep & Respiratory Care and Connected Care Informatics. The Personal Health businesses segment consists of Oral Healthcare, Personal Care,Mother and Child Care. The Other segment reports on the items Innovation & Strategy, IP Royalties, Central costs, and other small items. The company was founded by Anton Frederik Philips and Gerard Leonard Frederik Philips in 1891 and is headquartered in Amsterdam, the Netherlands.
We are doing some bottom fishing here, but it also pays 5% dividend and has been down significantly.
If PHG continue to trade above $12, we keep it in our portfolio
Amazon ($AMZN) - Buy under $85
Current Price : $85.14
Pays Dividend : No
Market Cap : $868B
Analyst Target : $165 (max target)
Stop Loss at: $68
This needs no introduction. It engages in the provision of online retail shopping services and Amazon Web Services segment consists of the global sales of compute, storage, database, and AWS service offerings for start-ups, enterprises, government agencies, and academic institutions.
We are adding AMZN a little bit early to our portfolio, it is still in Stage 4 decline and has not formed a base yet.
It could possible goes down till $70, but for long term AMZN could be the great addition in our portfolio.
GlobalFounderies Inc ($GFS) : Buy above $45
Current Price : $52.91
Pays Dividend : No
Market Cap : $27B
Analyst Target : $100 (max target)
Stop Loss at: $40
Net Income growth: 400% in 2022 (ttm), 81% in 2021
Basic EPS growth: 300% in 2022 (ttm), 63% in 2021
GFS Provides foundry services and manufactures semiconductors. It offers global shuttle, mask, post-fab and turnkey services. The company was founded in 2009 and is headquartered in Malta, NY.
It's a recent IPO and still in Stage 1 and basing around it's IPO price.
But GFS has showing tremendous earning potential and has grown Net income and gross profits consistently in last 7 quarters.
Kratos Defense and Security Solutions ($KTOS): Buy Above $10
Current Price : $10.55
Pays Dividend : No
Market Cap : $1.3B
Analyst Target : $15
Stop Loss at: $9
Kratos Defense & Security Solutions, Inc. provides mission critical products, services and solutions for United States national security priorities. Its products include microwave electronic products, satellite communications, modular systems, and rocket support operating. The company was founded on December 19, 1994 and is headquartered in Round Rock, TX.
KTOS is in solid Stage 4 decline through out 2022 since it topped in 2021. Net Income for 2023 is forecasted to grow significantly and we can see KTOS has started to form a base.
Workday ($WDAY) : Buy between $160 to $150
Current Price : $161
Pays Dividend : No
Market Cap : $41B
Analyst Target : $200
Stop Loss at: $149
Workday, Inc. engages in the development of enterprise cloud applications for finance and human resources. It delivers financial management, human capital management and analytics applications designed for companies, educational institutions and government agencies. The company was founded by David A. Duffield and Aneel Bhusri in March 2005 and is headquartered in Pleasanton, CA.
Workday is forming a base right above 30 Week moving average and expected to grow net income in 2023 significantly. As WDAY post good result, we might see good price movement.
For all above stocks, we look for Stage 2 breakout and Stage 1 base forming. In Portfolio 2023, we will never hold a stock which is in Stage 4 decline. As soon as the stock breaks 30 week moving average and breaks a support trendline on weekly average, we cut our loss or book our profit and exit.
Thanks for reading!!