Did you rebalance your portfolio before the year ended? If you didn’t, you’re not alone. But if your portfolio is not performing as well as you’d like, it may be time for some fine tuning. At least that’s what history says.
That’s because, historically, the twelve months following a midterm election tend to be bullish for stocks. Why that’s the case is left for people with higher security clearances than we have. But it’s your job to invest in the market conditions that exist - not the ones you think should exist.
And that means it’s time to position your portfolio for what is likely to be a strong year for stocks…at some point. You knew there’d be a caveat.
Well here’s another one. You also need to be in the right stocks. That’s the focus of this special presentation.
We're taking a look at seven stocks that have a strong case to be made for growth in 2023. And some of these stocks offer a good entry point for investors now.
Quick Links
- Enterprise Product Partners
- ExxonMobil
- NextEra Energy
- Visa
- UnitedHealth Group
- Nutrien
- Procter & Gamble
#1 - Enterprise Product Partners (NYSE:EPD)
The energy sector will remain a focus of both parties in the coming year. And Enterprise Product Partners (NYSE:EPD) is a savvy choice for investing in whatever comes next. The company is a midstream operator. That means it’s responsible for transporting natural gas from point A to point B. The company has an expansive pipeline network that covers over 50,000 miles.
Enterprise generates revenue through contracts that provide consistent, predictable cash flow regardless of the daily price of oil. This could steer away growth investors because the EPD stock price tends to not move sharply.
However, the company is very appealing to income investors because it is structured as a master limited partnership. This means it pays out a significant amount of profit as a dividend. And that is reflected in its dividend yield, which is currently over 7.5%. It’s also increased its dividend for 24 consecutive years, putting it on the cusp of being a dividend aristocrat.
About Enterprise Products Partners
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. It operates in four segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services.
Read More - Current Price
- $31.79
- Consensus Rating
- Buy
- Ratings Breakdown
- 10 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $34.00 (7.0% Upside)
#2 - ExxonMobil (NYSE:XOM)
There’s little doubt that the world is committed to investing in renewable energy. But that doesn’t mean there’s no room for traditional oil and gas stocks in your portfolio. And if you’re going to include just one, ExxonMobil (NYSE:XOM) is a solid choice.
First, the world will need fossil fuels to build out a new energy infrastructure. And second, many old-line oil and gas companies continue to actively invest in renewable energy. ExxonMobil is no different. One of its investments is in renewable diesel, which is becoming of increasing importance as diesel fuel supplies dwindle across the world.
And ExxonMobil just delivered a strong quarter, with net earnings coming in at a record $19.66 billion. That comes out to $4.14 per share on revenue of $115.68 billion. XOM stock is up 71% in 2022 as of this writing. However, oil and gas stocks are notoriously cyclical. To help offset that, ExxonMobil is a dividend aristocrat that has increased its dividend for 39 consecutive years and has a dividend yield of over 3%.
About Exxon Mobil
Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas in the United States and internationally. It operates through Upstream, Energy Products, Chemical Products, and Specialty Products segments. The Upstream segment explores for and produces crude oil and natural gas.
Read More - Current Price
- $120.35
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $130.21 (8.2% Upside)
#3 - NextEra Energy (NYSE:NEE)
We could probably put seven energy stocks on this list, but we’ll limit it to three. The last of which may be the most appealing to some investors. NextEra Energy (NYSE:NEE) is one of the nation’s largest electric utilities. Utility stocks are typically considered conservative, low beta investments. They offer predictable income because electricity use is generally stable no matter what is happening in the broader market.
That being said, the price movement for NEE stock has been comparable to a tech stock. The stock has been at a 52-week range between $67.22 and $93.73. One reason for that is that the company has a significant renewable energy portfolio. The company generates more capacity from wind and solar projects than any electric utility in the country.
This dual focus is one reason the company is posting record earnings and profits this year. And it also means that NextEra Energy should be less impacted by the cyclical nature of the energy markets.
About NextEra Energy
NextEra Energy, Inc, through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear,natural gas, and other clean energy. It also develops, constructs, and operates long-term contracted assets that consists of clean energy solutions, such as renewable generation facilities, battery storage projects, and electric transmission facilities; sells energy commodities; and owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets.
Read More - Current Price
- $76.87
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $86.54 (12.6% Upside)
#4 - Visa (NYSE:V )
The bullish case for Visa (NYSE:V) is that the company is now part of a broad category of companies known as payment processors. While it’s true that the company will continue to be well-known for its iconic credit cards, it has a toe in a lot of “verticals” including the realm of peer-to-peer payments, which puts it in competition with PayPal (NASDAQ:PYPL), Apple (NASDAQ:AAPL), and Block (NYSE:SQ).
However, for the rest of 2022 and 2023, inflation is likely to be the story. And as data shows, consumers are breaking out their plastic to pay for travel. And, less fortunate, some consumers need to use their credit cards to manage inflation.
Either way, it’s likely to bode well for the company’s future revenue and earnings, which are both at record levels. While it’s unlikely that Visa will continue to produce over 20% revenue growth in 2023, it did offer revenue guidance in the mid-teens. That would be enough to justify the company’s stock price even as it trades at around 29x earnings as of this writing.
About Visa
Visa Inc operates as a payment technology company in the United States and internationally. The company operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. It also offers credit, debit, and prepaid card products; tap to pay, tokenization, and click to pay services; Visa Direct, a solution that facilitates the delivery of funds to eligible cards, deposit accounts, and digital wallets; Visa B2B Connect, a multilateral business-to-business cross-border payments network; Visa Cross-Border Solution, a cross-border consumer payments solution; and Visa DPS that provides a range of value-added services, including fraud mitigation, dispute management, data analytics, campaign management, a suite of digital solutions, and contact center services.
Read More - Current Price
- $307.39
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 25 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $321.74 (4.7% Upside)
#5 - UnitedHealth Group (NYSE:UNH)
Healthcare will continue to be one of the most investable sectors in 2023. And UnitedHealth Group (NYSE:UNH) is one of the largest players in this space. Contrarians would note that with the company’s size also comes a premium valuation. UnitedHealth Group carries the largest market cap in the sector at approximately $519 billion.
If you agreed with the thesis I laid out for NextEra Energy; you may find a similar bullish case is in play with UNH. The company’s core business remains health insurance. This ensures consistent, predictable income. Demand for healthcare is not going to go down, and the company is able to raise its premiums to both consumers and businesses.
But through its Optum Labs business unit, United Heath Group give investors exposure to health technology. Specifically, the company uses “cutting-edge analytic techniques” to measure health outcomes. This has led to the creation of value-based payment arrangements where providers are paid based on how well a patient does.
About UnitedHealth Group
UnitedHealth Group Incorporated operates as a diversified health care company in the United States. The company operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. The UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; health care coverage, and health and well-being services to individuals age 50 and older addressing their needs; Medicaid plans, children's health insurance and health care programs; and health and dental benefits, and hospital and clinical services, as well as health care benefits products and services to state programs caring for the economically disadvantaged, medically underserved, and those without the benefit of employer-funded health care coverage.
Read More - Current Price
- $600.50
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $615.53 (2.5% Upside)
#6 - Nutrien (NYSE:NTR)
One of the more frightening stories emerging for 2023 is the possibility of food shortages. There are many reasons for this, including Russia’s invasion of Ukraine and the high cost of fertilizer which is itself driven by the high cost of fuel. That brings the Canadian-based Nutrien (NYSE:NTR) into the spotlight.
Nutrien is the world’s largest potash producer. Ukraine is also one of the leading suppliers of potash. But that supply has largely been offline since the Russian invasion. The company is also the third-largest producer of nitrogen fertilizer, which, as noted above, is in high demand as farmers try to increase production.
NTR stock is up 20% in the last year, and it looks like it still has some room to grow. The stock has a P/E ratio of 6.8x. And that is below the sector average, so there’s likely some upside to go with this stock, particularly if revenue keeps growing at its current pace.
About Nutrien
Nutrien Ltd. provides crop inputs and services. The company operates through four segments: Retail, Potash, Nitrogen, and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seeds, and merchandise products. The Potash segment provides granular and standard potash products.
Read More - Current Price
- $45.91
- Consensus Rating
- Hold
- Ratings Breakdown
- 10 Buy Ratings, 6 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $60.33 (31.4% Upside)
#7 - Procter & Gamble (NYSE:PG)
The last stock on our list is a defensive stock that should hold up extremely well regardless of what happens with inflation. Procter & Gamble (NYSE:PG) is a member of the all-important consumer staples sector. Investors are moving to risk-off assets, and those that are staying in stocks are seeking out the quality that a blue-chip stock like PG provides.
Companies like P&G have the ability to pass along higher costs to their consumers. And because the company is home to some of the most iconic brand names in the world, consumers will frequently continue to pay more, even when less expensive house brands exist.
With a P/E ratio of just below 24x, PG stock is about at the sector average. And as of this writing, the stock, which was trading around its 52-week low prior to its October earnings report, has been creeping higher, which may be good news for growth investors. In the meantime, income investors can enjoy its rock-solid dividend, which the company has been increasing for 66 years and now pays a dividend yield of 2.70%.
About Procter & Gamble
The Procter & Gamble Company engages in the provision of branded consumer packaged goods worldwide. The company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers conditioners, shampoos, styling aids, and treatments under the Head & Shoulders, Herbal Essences, Pantene, and Rejoice brands; and antiperspirants and deodorants, personal cleansing, and skin care products under the Olay, Old Spice, Safeguard, Secret, SK-II, and Native brands.
Read More - Current Price
- $170.92
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $177.00 (3.6% Upside)
Most investors don't really care about who occupies the White House or the halls of Congress. There's money to be made either way. And in many cases, the stocks that will tend to do well will do well regardless of who controls the purse strings.
But investors shouldn’t ignore an unmistakable historical trend that says stocks are likely to go up this year..and maybe by a lot. And it’s never too late to prepare.
The case for these stocks is based on macroeconomic trends (energy, healthcare, inflation) that are likely to be around for all of 2023 and perhaps beyond. But don’t take our word for it, be sure to do your due diligence.
And when you're doing your due diligence, be sure to use MarketBeat tools such as our stock screener to compare stocks that you like quickly. And when you find one that fits your objectives, be sure to add it to one or more of your watchlists so you get real-time alerts on pertinent news.
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