The following are the stocks that several of the instructors are looking at for 2023. Much of this write-up is a transcript from the live broadcast recording on Friday, Dec 30, 2022. There have been slight grammatical changes to make the wording make sense from the recording of the live discussion. All comments referencing the stock are the instructor’s opinion and are not intended as investment advice.
DAL ($32.86)- Maybe the recession will hit this stock later, but a lot of that risk is already in here at this price. When the March 2020 collapse happened, it was in the low $ 20’s, and a lot of that time, it was above $25. From here, this stock can go down $5, maybe $8, but with an approximate $15 or $20 upside. The average analyst price target is about $48. Morning Star is about $60. The stock is sitting at the low $ 30’s. This is quite compelling. I’m also looking for stocks with low PE compared to the market, and this one’s got a 6.
F ($11.63) – We’re down to the 200-week average on the recent price action. We have a marker back from March 2020. In 2020 this stock got to about $5, but again, most of the time, it was about $6 or more, so can it fall 50% more from here. I think that’s highly unlikely. I may be wrong, so I’m probably going to allocate some now and some later because who knows what will happen in the market in 2023. Average analysts’ price targets are about $15 fair value.
BAC ($33.12) – The average analysts’ price target is $40, which is close to where morning star is at $39. If the overall market goes down, it wouldn’t be spared. There is limited downside, and I don’t think it’s going down to 20. It doesn’t have as much upside, but I also don’t think it has many downside risks. It’s trading at a forward P/E. Of 8.8 and pays a 2.66% dividend.
TSLA ($123.18) This is the year of Tesla, considering what happened here recently with the drastic drop in December. I never like the idea of trying to catch a falling knife, but from a valuation standpoint, it’s the best value it’s ever been in history. In The Everyday Trader podcast, I shared an example of a trade where you can own the shares and make money if the stock goes up or the stock goes down. The stock is not going to stay where it is. It’s going to go much higher, or It’s going to go much lower. There’s reason to believe that it’s going to be more bullish. It’s not unreasonable that we can see Tesla closer to $200 or $250 by this time next year.
LEN ($90.50) – Most bad news is already priced into housing stocks. Housing will continue to recover as it looks as if mortgage rates have settled out. I think Lennar is the best in the group. It has a P/E ratio of 5.7 with a dividend yield of 1.66%. This is not a bad equity to own at this price.
TEVA ($9.12) – 2023 TEVA gets its wings. I’ve been in a collar with this stock for several years and have lowered my cost basis significantly. This year it will take off.
DIS ($86.88) – Bob Iger is back. He is this company’s visionary leader, and he drove it higher in the early decade of the 2010s. And he is back. It will be very interesting to see the handful of first conference calls he has to help stabilize the stock’s fall from its lofty valuation this last year. From a valuation standpoint, investors have pulled the idea that this is a growth stock similar to NFLX back to a blue-chip value stock. I believe it’s both. It is still a value stock due to its theme parks and merchandising, but I also believe there’s a lot of growth potential for Disney out of Disney+. Investors just pulled that all back, and I believe there’s an opportunity. They still have some of the best intellectual property anywhere in the entertainment space.
CVX ($179.49) – I like that Mr. Buffett owns Chevron, one of Berkshire’s major holdings. I think oil is going back up again. You could see oil back at $100 a barrel as we continue to buy oil to rebuild the strategic petroleum reserve this year. I think the demand for a strong economy will also drive the demand for oil. Even if oil doesn’t climb back to $100, it should still be good for CVX. With $80 oil where it’s sitting right now, the profit margins at Chevron are amazing. They pay a 3 2% dividend yield which is also a positive.
MSFT ($239.82) – Microsoft has a couple of sides to its business that creates a potential upside and a downside. On the one hand, the massive mega-cap tech stock prices decline in 2022. MSFT was impacted more than AAPL as a comparison but not as bearishly impacted as Tesla, Amazon, or Google. On the other hand, I also like what Microsoft is doing in a couple of different places. Number one is their purchase of ATVI. Even though they’re facing a lawsuit from the FTC about claims of too much ownership in the game space, they’ll get the deal done. This acquisition was a big move, another big move for them. It follows their purchase of Minecraft several years ago. They are now a big player in the video game space, a continuing strong trend. The other thing that I like is their investment in open AI. This area of investment is the future economic growth sector. Microsoft, put 1 billion dollars into this venture. Microsoft’s investment is estimated at about 20 billion, and we’re beginning to see the value of this future technological advancement.
COIN ($35.39) – I expect Coinbase is going to recover. COIN is making money. They will have a tough quarter as they are exposed to the FTX fraud and all the peripheral damage caused by that. As time passes, we will get beyond that. Investors have this amazing, uncanny ability to forget, and they will do that too. And the FTX will become a thing of the past, and Coinbase is solid. Their PE ratio is 3.62.
SOFI ($4.61) – If you follow this company monthly and look at their 10-Ks and their 10-Q, they are getting it done. The only thing that has delayed them from hitting their company goals of an explosion into profitability, and being a substantial bank, is that the President has decided that people should be able to go to college for free. I sure wish they’d rebate me on all the money I spent on college for not just me but for kids; that’d be great. But no, that’s not going to happen. SOFI stock price will recover from this short-term panic caused by this external factor as the external factor fades away.
AAPL ($129.93) – Apple is one of my favorites. I was a net seller of stocks in 2022 overall. I acquired a few things, but I used rallies to create cash for the most part. This is one stock I didn’t sell a single share of and don’t plan to sell a single share. I would not have picked Apple for 2023 if it were still sitting where it was, let’s say, two weeks ago, in the $150s. This is because, at that point, AAPL was the domino that needed to fall so that we could price in and realize that the Fed is not our friend in the stock market. They will stay on this path of interest rate hikes for longer. Can Apple go to 100? Could it go to 105? Sure, that would be a phenomenal opportunity if that happens. These guys create a ton of cash. Once you are in their ecosystem, you don’t leave, and they’ve been smart about monetizing that ecosystem. They pay a dividend as well. Apple will not necessarily be a 30% gainer on the year. It can be a good place to put money to store value.
COST ($456.50) – This is the retailer I will pick for this next year. The last time they raised their membership fees was in 2017, and on average, they raise those fees every five and a half years or so, which would put us into this next year, 2023. This could increase profit margins overnight as most Costco members won’t leave if their membership goes up 10%. They also have a history of increasing their dividend or paying special dividends from time to time. It wouldn’t surprise me to see either one or both of those things happen this year. This is a stock that’s pulled back amidst the damage in the markets, and it can be a great holding and a great collar trade stock for 2023.
ATVI ($76.55) – I think the deal gets done. I know that there’s a lawsuit. Hey, Chile, as a country, just yesterday said, “sure, you can do this.” That should tell us something. I think the deal gets done originally. The acquisition price was $95. The fact that the stock is trading in the $ 70s indicates that the markets are questioning whether this deal gets done, but if it does, and it’s anywhere near that price, that’s going to be nice. I own shares; I don’t hedge them so that if it takes off, my position isn’t hindered by a short call.
