Fears of a recession have pushed people to reconsider their financial health and thoroughly reevaluate investment strategies. While big corporations indulge in cost cutting measures to tide over rough times, individuals and households must carefully assess their budget and plan for the future. One way to build individual wealth is to invest in stocks 2023. Carefully studying and setting money aside to purchase the best stocks for 2023, will significantly improve your financial position.
Author Napoleon Hill once said, “Both poverty and riches are the offspring of thought.” As we move into the next year, it is necessary to have both active and passive income streams. Investing a fixed amount into the FTSE 100 or the S&P 500 makes for a good start.
The Charles Schwab Foundation discovered that 65% of people with a written financial plan say they feel financially stable. Financial planning is key to managing expenses and getting over the feeling of “not having enough money.” You can even refer to financial planning books for advice on how to budget and save.
WHY INVEST IN STOCKS?
The economy has been battered by rising inflation and geopolitical instability. Households have found it tough to budget amidst economic uncertainty and supply chain issues.
The stock market tends to reflect investor feelings about the future, and this year has been anything but hopeful. Investors have seen a sharp spike in sell offs, wildly changing oil prices, and hike in interest rates affecting the economic climate.
Although the S&P 500 rose in 2022, on the back of tech companies, by October they reflected the grim mood on the market as companies prepared for recession 2023. Overall, the S&P is down nearly 20% year-to-date, on pace for its biggest calendar-year drop since 2008.
The stock market consists of companies that provide goods and services, along with jobs that power the economy. Hence, the stock market is forward-looking.
Economic experts believe that the best way to build wealth is to start investing, and fluctuations do not matter as long as you stay invested.
Owning stocks in different companies can build savings, protect you from taxes, and maximize your investment potential. The key factor is to understand your risk tolerance and invest accordingly.
Historically, long-term equity returns have been better than returns from cash or fixed-income investments such as bonds. Investors must take a long-term view while investing in stocks as the market tends to experiences ups and downs.
Billionaire investor Warren Buffet says, “The most important quality for an investor is temperament, not intellect.”
BEST STOCKS FOR 2023
Some stocks stand the test of time. Not because those companies make the best products but because they constantly innovate and re-evaluate their priorities. Investors have been wary of IPOs, but some companies that were expected to debut in late 2022 pushed their plans into the new year. Other than the IPOs 2022, the best stocks to buy in 2023 range from tech to retail.
Stocks 2023 will help you build a profitable portfolio, as some dividend stocks give passive income while some others climb higher in value.
1. Amazon Stock
Amazon stock has always been viewed as an investment goldmine by most financial experts. More than the scale and size of the company, analysts note the tech company’s dedication towards digitization. From being a market leader in cloud computing with Amazon Web Services to solidifying its presence in healthcare with the acquisition of One Medical, Amazon is here to stay.
This year, Amazon stock has declined by about 50%, and eagle-eyed investors are snapping it up as it trades at pre-pandemic rates. Although the Amazon share price has come down, it is still on the higher-end of the spectrum.
For investors, Amazon stock makes for a good investment as the company has investments in promising players like Miller Value Partners and Markel. It also has recently launched Amazon Catalytic Capital that will invest in venture capital funds that support companies led by Black, Latino, Indigenous, women, and LGBTQIA+ founders.
Although the ecommerce giant’s stock has faced a decline this year, experts are optimistic about its future growth prospects.
As of December 27, Amazon share price stood at $85.25 per share while its 52-week high was $172.94.
Tech experts are upbeat about the company’s growth prospects and aggressive digitization, and believe that it is a good stock to hold on to for the long term.
2. Costco Stock
One of the best stocks to buy in 2023, according to financial experts, Costco is one of America’s favorite marketplaces. The company offers bulk merchandise at discounted prices and is almost the drug of choice for homemakers.
EPS stands for Earnings Per Share, and Costco has managed to grow it by 16% per year, over three years. The company stands to reap in bigger profits if it can sustain this rate of growth.
Costco Wholesale has always had loyal customers and the businesses’ resilient nature has mostly worked in its favor.
Financial planners predict that consumer spending will improve in the coming year, rendering Costco stock highly valuable. Costco’s share price is expected to climb higher as a dedicated strategy helped the company weather a tumultuous 2022.
Early December 2022, Costco’s share price fell after the retailer missed Wall Street expectations for its fiscal first quarter. The company is reportedly also wrestling with a possible membership-fee hike.
Despite falling more than 37% this year so far, Costco’s shares have solid growth potential, making it a strong buy on Wall Street.
However, some investors have expressed their concern with Costco stock as the bulk warehousing giant might underperform next year. If Costco’s growth trajectory slows or stagnates, investors might backtrack, but currently it is priced for perfection.
3. SoFi Technologies Stock
SoFi is known for its loan refinancing business. Mid-December, SoFi stock skyrocketed after its CEO Anthony Noto bought nearly $5million worth shares, boosting investor spirit.
SoFi stock has plunged over 70% this year but as the filings revealed that Noto purchased SoFi shares between December 9 and 13, experts are optimistic about the company’s growth prospects.
Noto’s confidence in the company has worked in its favor and shares were up nearly 7% after the reveal.
The financial firm now functions like a bank and can also issue loans and provide deposit services without relying on third-parties.
SoFi’s stock has been hovering around the $4.5 range and analysts expect it to climb up to around $12 by 2023. Its 52-week high stood at $16.49 on December 31, 2021.
The lending company’s stock is a growing stock, and investors can be worried about its volatility.
The student-loan moratorium has impacted demand for its student-lending products and the current economy has also affected demand for home loans.
As the company’s business model is thorough with revenue improving each year, investors are optimistic about its future performance. Despite concerns about the company’s struggle to turn a profit, many are hopeful that the stock will hold in the long term.
SoFi is well positioned to expand its services and customer base and offers multiple services under one app. Analysts expect SoFi stock to nearly triple in value from its current rate and are impressed by its 53% increase in revenue over the past year.
SoFi is one of the best stocks for 2023 if you can hold on to it.
4. Disney Stock
Global entertainment company Walt Disney functions under two main umbrellas – Linear Networks (Disney Media and Entertainment) and Parks, Experiences and Products business.
To say Disney has faced a tumultuous year is an understatement of epic proportions. From former CEO Bob Chapek’s silence on the Florida bill to raising park prices, Disney has seen numerous changes in the last year.
To top it all, the company brought back former CEO Bob Iger to take the helm as stakeholders worried over declining profits.
While leadership controversies and spiraling earnings have cast a dark shadow on things, there is no denying that Disney parks have seen more visitors and the streaming service has added millions of subscribers. Disney+ offers both ad-supported and no-ads subscription plans and saw its subscriber base rise to over 235 million.
In the coming year, Disney has plans to grow its streaming services, with a greater focus on profitability. Iger has been signed on to spearhead the change, with a two-year contract.
As of December 2022, Disney stock (DIS) has been falling down to pre-pandemic levels and have lost nearly 52% from its all-time high of $203 in March 2021.
As of December 27, Disney stock closed at $86.37 and is expected to reach $100 by the end of 2023.
The company is facing stiff competition from Netflix in the streaming service arena, but with the easing of Covid-19 restrictions, its parks and film-releases have seen rising profits. Its most recent release James Cameron’s Avatar: The Way of Water has been going strong, nearly $900 million in global ticket sales.
Disney stock is a constituent of the S&P 500 index and is listed on the New York Stock Exchange.
5. Eli Lilly Stock
Pharmaceutical company Eli Lilly’s stock fell further this December after its earnings guidance fell short of Wall Street Expectations. But Eli Lilly stock has risen almost 35.5% this year, since the start of 2022.
Some experts believe that Eli Lilly stock is set for some pullbacks after an incredible run this year. While some others are of the opinion that it is one of the best stocks for 2023.
The main reason behind Eli Lilly’s spectacular performance in 2022 is its main drug candidate, Mounjaro. Although developed to combat Type 2 diabetes, investors have come to also see its potential as an obesity drug. They hope to gain the requisite approvals in the coming year.
Mounjaro has already received Fast Track Designation from the Food and Drug Administration (FDA). The drug pulled in revenues of $97.3 million during the last quarter. Further approvals will significantly boost the share price of Eli Lilly.
Before the end of 2023, the pharma company is expected to launch four more products, including a drug to treat early-stage Alzheimer’s.
“Several of our late-stage medicines for serious diseases were submitted for approval this year, and will hopefully launch in 2023,” Lilly CEO David A Ricks said in a statement, mid-December.
In 2023, Eli Lilly is banking on the potential launches to assist its next growth wave. Despite dialing back its expectations for 2023, most analysts feel that Eli Lilly stock will stay in the green next year.
Having Eli Lilly stock also means getting dividend pay, which has been increased gradually over the last eight years.
The share price for Eli Lilly stood at $364.88 at the close of December 27, and is expected to acheive a median target of $400 in the coming year.
Financial planning isn’t just about investing; it’s about what money can do for your confidence, security, and quality of life. Even if you have all the best stocks to buy in 2023 in your portfolio, it is necessary to be aware of additional fees and investment costs.
Your financial plans must also be tailored to suit your individual needs and help you achieve your goals. Even though different experts suggest a variety of stocks 2023 to stock up on, it is up to each investor to do their due diligence.
Having a written financial plan is also key to a sense of security while leaving room for improvement. It also shows you your goals and progress at a glance.
HOW TO CREATE A FINANCIAL PLAN?
High income does not necessarily mean bigger savings. Don’t believe us? You might want to watch Netflix’s new documentary Get Smart With Money.
The documentary points out that your circumstances can change anytime. Whether it is to secure your business’ financial future or individual needs, a well-thought plan will help you overcome the curveballs of life.
Before creating a financial plan, you must calculate your net worth. Net worth is calculated by subtracting liabilities from assets.
The next step is to analyze your expenses, followed by preparing SMART goals. The 50/30/20 rule is a time-tested way to achieve your financial goals.
You spend 50% on essentials, 30% on wants, and set aside 20% for the future. Savings also include preparing a retirement fund, planning for emergencies, and organizing your investments.
In case you have debt, you must make provisions to pay it off quickly. Some financial experts recommend splitting paychecks into five categories – bills (also includes debt), spending account, personal wants, emergency savings, and dream savings (investment).
The stock market, although predictable in its unpredictability, can be thwarted by studying past performances, growth forecasts, and planned changes.
If you feel unequipped to navigate the intricacies of the stock market, it is best to team up with a financial planner who can guide you.
