7 Top Stocks That Can Make You Richer in 2023

When investors cross the proverbial finish line of 2022 in less than two and a half months, they will likely regard this year as one of the toughest in history. The very followed Dow Jones Industrial Averagereference S&P500and equity-driven growth Nasdaq Compound all fell into a bear market, with these respective indexes dropping between 22% and 38% at their highs.

For many, significant market downturns can tug at their emotions and test their resolve to stay invested. But the story is abundantly clear that making silver work during bear market declines is a smart move. Eventually, every notable correction and bear market in history was left to eat the dust of a bull market rally. This means that 2023 could represent a fresh start for long-term investors and all the more reason to shop around.

Here are the top seven stocks that have the catalysts and intangibles to get you rich in 2023.

Image source: Getty Images.

1. Metaplatforms

The first is the world’s leading social media stock, Metaplatforms (META -1.16%). Despite a miserable year, worries about Meta’s ad revenue and spending on the Metaverse seem overblown, setting the company up for a strong rebound in 2023.

Meta is the parent of four of the most visited social media assets on the planet (Facebook, Instagram, WhatsApp and Facebook Messenger). In the quarter ending June, 3.65 billion people around the world visited at least one of these sites each month. That’s more than half of the world’s adult population. Even in the face of a difficult national and international economic environment, the number of monthly active Meta users continued to grow. Advertisers are well aware that there is no platform on the planet that gives them a better chance of reaching audiences with their message than Meta-owned assets.

The other thing to consider is that Meta has the freedom to spend aggressively on the Metaverse thanks to the $40.5 billion in cash, cash equivalents, and marketable securities on its balance sheet, as well as the $58.5 billion in dollars it generated in operating cash flow during the period. period of 12 consecutive months (TTM). The Metaverse can be a multi-trillion dollar opportunity, and Meta would like to position itself as a key on-ramp. This is a company that can easily afford to spend on high growth initiatives while still being very profitable.

WTI Crude Oil Spot Price Chart

The sustained rise in oil prices should encourage new drilling projects and stimulate demand from intermediate operators. WTI crude oil spot price data by YCharts.

2. Enterprise Product Partners

A second top stock that can make you rich in the coming year is oil and gas company Enterprise Product Partners (EPD 0.08%). Enterprise pays a huge dividend (7.5%) and has increased its base annual payment for 24 consecutive years.

While some of you might be worried about investing in oil stocks as talk of a US recession swirls, enterprise product partners can dodge those concerns. This is because it is an intermediate operator. It controls more than 50,000 miles of transmission pipeline, two dozen natural gas processing facilities and can store 14 billion cubic feet of natural gas. Midstream operators rely on fixed price or volume-based contracts, which makes their operating cash flow quite predictable, regardless of the volatility of oil prices and natural spot prices.

Moreover, the global energy complex is broken – or at best deteriorated. Capital investment was drastically reduced during the recession, and Russia’s invasion of Ukraine compromised oil and gas supplies to parts of Europe. With no immediate solution to global supply, energy commodity prices are expected to remain above average. This is likely to encourage domestic drilling, which is a boon for midstream operators like Enterprise Products Partners.

3. Mastercard

payment processor MasterCard (MY 2.06%) is another rock-solid stock that has a good chance of making investors rich in 2023.

For most businesses, historically high inflation is a headwind. But for a company like Mastercard, whose business is based on fees generated by payments made on credit cards, inflation can be a tailwind. No amount of inflation will prevent consumers from buying essential goods and services. Additionally, higher prices could make consumers rely on credit cards more often in the foreseeable future.

Mastercard’s fiscal prudence is a second reason to believe stocks will rise in 2023 after a tough 2022. Although the company is likely a successful lender, its management team has stuck strictly to payment processing. By choosing to avoid lending, Mastercard doesn’t have to worry about setting aside capital to cover loan losses. Not needing “just in case cash” to cover loan losses is a major reason Mastercard’s profit margin is firmly planted above 40%.

Warren Buffett at his company's annual meeting of shareholders.

Warren Buffett, CEO of Berkshire Hathaway. Image source: The Motley Fool.

4. Berkshire Hathaway

Billionaire Warren Buffett isn’t infallible, but he’s been virtually unstoppable for long stretches as a conglomerate CEO Berkshire Hathaway (BRK.A 3.19%) (BRK.B 3.28%). During his 57 years as CEO, Buffett has overseen an average annual return of 20.1% for his company’s Class A shares (BRK.A). This type of balance sheet certainly makes Berkshire an attractive holding for 2023.

The success of the Oracle of Omaha is tied to two key aspects of Berkshire’s investment portfolio. First, it is full of cyclical stocks, that is, companies that fluctuate with the health of the US economy. Even though recessions are inevitable, Buffett wisely understands that booms last much longer. He positioned Berkshire Hathaway to take advantage of these long-standing bull markets.

The second factor helping Berkshire Hathaway is Buffett’s love of dividend stocks. Over the next 12 months, Buffett’s company is expected to collect north of $6 billion in dividend income. Dividend stocks are almost always profitable and proven. Even better, they have a history of significantly outperforming companies that don’t offer a dividend, making them a smart catch for patient investors.

5. NextEra Energy

Electric utility stock NextEra Energy (BORN 1.43%) is a fifth stock with everything you need to get rich in 2023. Including dividends paid, NextEra has delivered a positive total return to its shareholders in 19 of the past 20 years.

The greatest thing about utility stocks is the predictability of their operating models. In the case of NextEra Energy, its customers change their electricity consumption habits little from one year to the next. Being able to accurately forecast its annual cash flow is important because it allows the company to shell out capital for new projects, acquisitions, and its dividend, without hurting its profits.

But what really sets NextEra Energy apart from all other power utility stocks is its focus on green energy projects. No electric utility in the country generates more capacity from wind or solar power. With oil and natural gas prices well above average, the cost savings of relying on renewables really stand out for NextEra. While most utilities are growing slowly, NextEra’s focus on green power should help it maintain high single-digit earnings growth.

6. UnitedHealth Group

The healthcare giant is another company with a proven track record of enriching investors. UnitedHealth Group (A H 2.47%). Including its dividend, UnitedHealth has produced 18 positive returns for its shareholders over the past two decades.

One of the things that makes UnitedHealth Group tick is its insurance operations. Although insurance is not a fast growing industry, it generally generates predictable cash flow. Since catastrophic events that result in higher payouts are inevitable for insurance companies, they often have little trouble passing on higher premiums to the individuals and businesses that hold policies.

But insurance is only one reason for UnitedHealth Group’s long-term outperformance. Much of the credit goes to healthcare services subsidiary Optum, which is growing at a faster organic rate than the insurance segment and also providing a juicier operating margin. Optum provides software used by healthcare organizations, as well as prescription refills to hospitals, among its many services.

Chart of PYPL PE ratio (before)

Based on future earnings, PayPal has never been cheaper. PYPL PE Ratio (forward) data by YCharts.

7. PayPal Credits

The seventh and final top stock that can make you richer in 2023 is the fintech specialist PayPal Credits (PYPL -0.99%). Even though some PayPal users are feeling the effects of high inflation, the company’s key performance indicators continue to impress.

For example, at the end of 2020, the average active PayPal account holder made nearly 41 transactions on a TTM basis. But at the end of June 2022, the average active account was making nearly 49 trades over a TTM period. This demonstrates that PayPal users are becoming more engaged over time, even in the face of a tough economic environment. Since the company derives most of its revenue from transactions, a more engaged user base is essential for sustained profit growth.

PayPal is also historically inexpensive. Given recently announced initiatives to cut its annual operating expenses by at least $1.3 billion in 2023, as well as the company’s $15 billion share buyback program, PayPal looks like a true theft of a deal at less than 22 times expected Wall Street earnings. year.

About Robert Wright

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