New Year 2023 will see a continued tightening of monetary policy as the Federal Reserve attempts to rein in sky-high inflation. Following the 50 basis point rate hike in Dec., there are expectations that Feb. and March will see 25 basis point rate hikes, respectively. That will bring target rates near 5% which is where investors should expect them to remain throughout 2023. In short, investors should expect 2023 to look and feel like 2022 in many ways. However, there are still a good deal of hot stocks to buy. Just prepare to invest accordingly. That isn’t meant to be gloomy. Growth still exists in several areas.
| ARRY | Array Technologies | $21.53 |
| ADM | Archer-Daniels-Midland | $94.27 |
| KYMR | Kymera Therapeutics | $27.52 |
| MRK | Merck | $111.11 |
| AMD | Advanced Micro Devices | $67.68 |
| HBAN | Huntington Bancshares | $14.00 |
| PRGO | Perrigo Co. | $31.80 |
Stocks to Buy: Array Technologies (ARRY)
Array Technologies (NASDAQ:ARRY) stock should have a strong 2023 because of its exposure to solar. At the moment, the company manufactures ground-mounting systems used in solar arrays.
Plus, there are several reasons to believe 2023 will continue to be kind to the stock. For one, solar is expected to be the fastest-growing subsegment in energy in 2023 with demand spiking 20-30%. Array Technologies will also benefit from domestic content requirements in the Inflation Reduction Act. Those requirements will preference the company’s made in the U.S.A components, giving it a boost.
In addition, Array Technologies’ business is booming. It reported record revenues of $515 million in its third quarter. That was a drastic improvement over the $188.6 million of revenues it posted year over year. The company is also reporting net income now after reporting losses in 2021. It’s difficult to find a serious issue that would indicate ARRY stock isn’t investment worthy.
Stocks to Buy: Archer-Daniels-Midland (ADM)
Archer-Daniels-Midland (NYSE:ADM) stock is expected to have another exemplary year in 2023. At the moment, the consensus of the Wall Street analysts covering stock said it could trade at $101 within the next 12 to 18 months. Others suggest that it could run to $110 within a year. Investors should also note the company has paid a dividend without reduction since 1976. That dividend yields a modest 1.7% which increases overall returns.
Archer-Daniels-Midland sells oilseeds, corn, and wheat, and serves various end markets through its nutrition segment. It should continue to do well in 2023 as the war in Ukraine continues to disrupt global agriculture overall. That strong momentum is reflected in the company’s most recent earnings which include profits that increased by 55.9% during the period.
Stocks to Buy: Kymera Therapeutics (KYMR)
Kymera Therapeutics (NASDAQ:KYMR) is another hot stock to buy as we near 2023. The company’s pipeline of anti-inflammatory and oncology treatments continues to move toward commercialization. Better, analysts say the KYMR stock could more than double in the next 12 to 18 months, depending on the progress of its pipeline.
One of the primary reasons to remain optimistic about Kymera Therapeutics is that it sits at the forefront of the targeted protein degradation field. The company was founded around protein degradation which it believes can serve as a basis for an entire class of future drugs. The firm also believes it recently demonstrated, for the first time, a clinically significant impact of a protein degrader outside of oncology. The company also boasts a cohort of protein degraders within the oncology field. It will share relevant clinical data around those drugs in 2023 which, if positive, will serve to potentially double its price.
Merck (MRK)
Merck (NYSE:MRK) also makes our list of top stocks to buy for 2023. Most impressive, company sales increased 14% in its third quarter year over year. Further, through the first nine months of 2022, Merck’s sales jumped 29%, from $35.2 billion to $45.45 billion. MRK also carries a dividend yield of 2.63% at the moment, making it even more attractive.
In addition, the MRK stock has a beta of 0.41. That means it is only 41% as volatile as the prevailing markets over the past 5 years. That should continue to be a strong point of attraction as a recession is expected beginning in late 2023. Two, it has a strong tailwind in that its immunotherapy has shown to be effective when taken in conjunction with Moderna’s (NASDAQ:MRNA) mRNA cancer vaccine.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) stock precipitously in 2022. It currently trades near $67 at the time of writing after being nearly halved. Fed interest rates will probably stay around 5% throughout 2023. In addition, It is expected that AMD will see an annual 28% earnings increase over the next 3 to 5 years. Investors won’t ignore that forever. So money invested in AMD stock now is very likely to appreciate in value quickly.
Analysts seem to like the AMD stock, too. UBS upgraded AMD to a buy rating, with a price target of $95 a share. Baird analyst Tristan Gerra also just upgraded the AMD stock to outperform with a price target of $100, believing the company’s newest Genoa chips could widen the company’s competitive moat.
“Genoa’s very significant performance step up should translate into an acceleration in market share gains for AMD in 2023, along with significantly higher pricing and a higher gross margin profile, reinforcing AMD’s EPYC performance leadership for years to come,” as noted by Yahoo Finance.
Huntington Bancshares (HBAN)
Huntington Bancshares (NASDAQ:HBAN) stock should continue to do well in New Year 2023. The Ohio-based commercial and consumer bank increased its prime rate to 7.5% on Dec. 15. That is a very solid indication that it should continue to see rapidly growing interest income into 2023. Essentially, Huntington Bancshares will charge more interest to its customers and therefore receive a greater amount of interest income.
The company had already raised its prime rate to 7% in Nov. What’s interesting is that all of the effects of those rising rates will be reflected in fourth quarter earnings. That follows an already strong third quarter earnings report in which interest income increased 11%, reaching $143 million. In short, investors can expect already strong revenues to get even stronger for the company. On top of that, Huntington Bancshares includes a dividend yielding 4.58% that can be used to increase gains through reinvestment.
Perrigo (PRGO)
Perrigo (NYSE:PRGO) is another one of the hot stocks to buy in 2023 . The company owns HRA Pharma which submitted an application for an over-the-counter (OTC) birth control pill back in July. That submission occurred just after the U.S. Supreme Court overturned Roe. v Wade. If its submission is successful, Perrigo will be the company with the first OTC birth control pill in the U.S.
Perrigo is a French company that continues to grow. Sales reached $1.1 billion in the third quarter, up from $1.04 billion a year prior. Sales also increased 8.67% through the first nine months of 2022, reaching $3.296 billion. Yet, at the same time, Perrigo is facing increasing costs leading to higher operating expenses. That has resulted in increasing net losses through Q3 ‘22 that swelled from $78.5 million to $116.9 million. Losses should get better in 2023 as the effects of rate increases work through the economy. In any case, potential OTC approval makes Perrigo worth buying as we move into the new year.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.