Baird's top stock picks for 2023 include Tesla and this favorite retailer

Published Thu, Dec 29 202211:00 AM EST

Investors looking to reposition their portfolios for 2023 may want to consider making bets on this assortment of stocks, according to Baird. Wall Street suffered a difficult 2022 as technology and growth-focused stocks tumbled against a backdrop of rising rates, rapid inflation and fears of a looming recession. Expect those issues to persist in the new year, but some names are better positioned to ride out the headwinds. As 2022 turns the corner, the Milwaukee-based firm revealed its best stock ideas for 2023. These are some of the tech, health-care, retail and consumer companies it recommends. Tesla shares have come under selling pressure this year in the wake of Elon Musk's takeover of Twitter . Baird lowered its price target on the stock to $252 a share, but still sees an opportunity for the electric car maker to more than double from Tuesday's closing price. Earlier this month, Tesla slid on growing demand concerns as the company began offering discounts on some of its higher-priced models. News of an extended shutdown at its factory in Shanghai pushed down Tesla shares by more than 11% on Tuesday. Tesla stock has plunged about 69% this year and is on pace for its worst month, quarter and year ever. "We are watching demand closely and don't believe it is a fundamental issue so far," Baird analyst Ben Kallo wrote, saying that Tesla should benefit from the Inflation Reduction Act and its incentives for EV adoption. "TSLA still has many demand levers to pull including more vehicle leasing and free charging across its network, among others," the analyst wrote. Another top stock contender for 2023 is beaten-up chip maker Advanced Micro Devices. Semiconductor stocks were among the worst performers in the Nasdaq this year as they grappled with overhanging supply constraints and a slowdown in demand for consumer products like PCs. Despite tumbling 56%, AMD shares could rally 58% based on Baird's price target. Analysts also named Bath & Body Works a top pick heading into 2023. The brand's position as a leading specialty fragrance retailer, with consistent product replenishment cycles, should stabilize demand even in a downturn, wrote analyst Mark Altschwager. The appointment of a new CEO should also boost investor confidence going forward, he said. Despite plummeting 40% this year, shares could gain as much as 19% from Tuesday's close. Goldman Sachs is also betting on Bath & Body Works, saying in a note to clients earlier this month that it's the top retail stock pick for 2023 . Shares of Chipotle Mexican Grill stand to gain almost 30% from Tuesday's close, according to Baird. The fast-casual dining stock is expensive, the investment bank admitted. (FactSet pegs the trailing P/E at 49 and the forward P/E at 33.) But that premium is justified given Chipotle's positioning for solid EPS gains and double-digit revenue growth over time, wrote analyst David Tarantino. "Efforts to strengthen operations could yield improving traffic performance in 2023 despite possible economic headwinds," he said. Baird also named Biogen , Hilton , Boeing , Visa and Microsoft takeover target Activision Blizzard as top picks for the new year. — CNBC's Michael Bloom contributed reporting