Wall Street names these 20 Club stocks as top picks for 2023. Here's the list and our takes

Published Thu, Dec 29 20223:32 PM EST

As we head into 2023, many of the major challenges in the stock market this year — including decades-high inflation, rising interest rates, a slower economy and a weaker consumer — are still unresolved. Against this backdrop, Wall Street analysts have been revealing the top stocks they believe can hold up, if not thrive, next year — many of which are in Jim Cramer's Charitable Trust, the portfolio we use for the Club. 1. Advanced Micro Devices Analyst take: Advanced Micro Devices (AMD) is positioned for a "rebound in the near term," UBS said, after the chipmaker's business felt the pain from the slowdown in the consumer personal computer market in 2022. Analysts are optimistic on AMD's PC business next year, given the company's focus on reducing inventory. They also see strength in its data center business and momentum in cloud workloads. These strengths will outweigh macroeconomic weakness. Club take: We've pared back our position in AMD this year as the semicondcutor company worked through its inventory correction. The glut in PC inventory is almost over. Semiconductors will continue to play an important role in the global economy — and as one of the industry leaders, we want to continue holding AMD. 2. Alphabet Analyst take: Alphabet (GOOGL) is a 2023 favorite at Truist, which believes the tech giant can deliver "mid-to-high single digit growth" next year while it continues investing in growth initiatives such as cloud and artificial intelligence projects. Analysts also believe Google can keep gaining market share in total online global ad spend in the next fiscal year. Club take: Alphabet's ad business may face continued pressure in an economic downturn, but it's still a leader in the space for its user data collection which optimizes ad placements. If management focuses on reducing operating expenses, it could be a positive catalyst for the stock. 3. Amazon Analyst take: Amazon (AMZN) is Citi's top pick across the broader Internet sector in 2023. Citi said while Amazon's retail business is under pressure in a slower economy, it believes the e-commerce giant can "gain wallet share during uncertain times." The company continues to take market share in total retail spending, a trend that will be in Amazon's favor because it already holds a "dominant share position in U.S. e-commerce." Club take: We like Amazon for its diversified businesses that have ample room for growth, particularly its cloud services business, Amazon Web Services, which has proven to be a market leader. The company has to do more in terms of managing its costs, but it will likely be a priority in 2023. 4. Apple Analyst take: Evercore ISI designated Apple (AAPL) as a top pick for 2023 because it sees the tech giant sustaining growth in a tricky economy next year. They called iPhone manufacturing headwinds in China "transitory," and they're more focused on long-term growth opportunities in its services and wearables operations. Analysts described growth outlooks in these segments as "robust" and expect them to drive revenue growth and margin expansion. Club take: Apple has for years been an "own it, don't trade it" stock for us as it maintains its leadership in hardware and grows its services business. We also see Apple's supply chain problems in China as temporary. The demand destruction for Apple products will be minimal due to its high loyalty and customer satisfaction rates. The company has already considered diversifying its production outside of China. While Apple isn't immune to risks in an economic slowdown, it has abundant room for growth well into the future. 5. Constellation Brands Analyst take: UBS said Constellation Brands (STZ) can deliver sustainable high single-digit organic revenue growth in beer in the coming years, citing continued innovation of its core brands and improvement despite near-term inflationary pressures. UBS calls STZ "one of the most attractive" names across the beverage universe since it can continue to provide sales growth which UBS said can support earnings-per-share growth. Club take: Despite an inflationary economy and a more cautious consumer, Constellation's growth-oriented beverage portfolio — including Corona and other top Mexican beers — has performed well, as consumer demand has held up. We expect STZ to be resilient in a recessionary environment since alcoholic beverages are seen as something people don't tend to forgo. Also, we see management's recent corporate governance improvements as a long-term positive for shareholders. 6. Costco Analyst take: "COST is well-positioned in an inflationary environment as higher-income households [and] existing customers seek bargains," Cowen said about Costco (COST) , which made the firm's Best Ideas 2023 list. Analysts said the retailer is likely to deliver earnings growth, sales growth and win market share in the near term as customers continue to shop for value. Club take: Costco is one of the best-run retailers in the world and a great defensive holding in a possible recession. As many consumers are price sensitive in an inflationary economy, Costco offers a deep value proposition to its members, making it an attractive place to shop for cost-saving deals. The company could offer a special dividend and maybe raise memembership fees in 2023. 7. Eli Lilly Analyst take: JPMorgan has Eli Lilly (LLY) as one of its best ideas for 2023 calling the biopharma company a "best-in-class" growth story poised for further growth in 2023. Analysts say its portfolio of medicines, particularly its new type-2 diabetes drug Mounjaro and its donanemab Alzheimer's drug can lead to margin expansion beyond 2023. Remember, Mounjaro is in trials to be used as an obesity treatment, too. Club take: We plan to be long-term investors in LLY for the company's robust lineup of medicines and new drugs in the pipeline, including hopes for regulatory approval of Mounjaro for weight loss. If that happens, it could be one of the best-selling drugs of all time. More broadly, the stable demand for LLY's products offers some protection against recession concerns. 8. Estee Lauder Analyst take: Estee Lauder (EL) is a top stock to own in 2023, according to JPMorgan. Analysts said the cosmetics giant's long-term underlying fundamentals are stable, and once the near-term China headwinds decrease, EL stock can perform better. Club take: We added to our EL position in November knowing that China remains a question mark in the short term, but we see long-term growth tailwinds for Estee Lauder in the region since it's one of the world's top global beauty companies. And look out once China fully reopens since business in the country accounts for more than one third of the company's sales. 9. Halliburton Analyst take: Halliburton (HAL) is a JPMorgan top 2023 pick that's poised to lead in the energy sector. Halliburton is among several energy stocks that JPMorgan analysts mentioned. They expect the oilfield services provider to benefit from "strong upstream spending growth" as global demand for drilling activity increases. They also anticipate capital return to shareholders to continue in the coming quarters. Club take: Halliburton, the largest oilfield services provider in North America, has a strong long-term investment case. In an environment with tight oil and natural gas supply, coupled with underinvestment in oil drilling, the company is well-positioned to grow its earnings. Furthermore, with expenses under control and plenty of pricing power, profit margins should expand. 10. Honeywell Analyst take: Bank of America named Honeywell (HON) a top pick for 2023 for its solid management, exposure to aerospace and energy, as well as its strong pricing power. BofA calls the Club stock a "top tier operator" and expects the company to grow revenue in the coming year despite fears of an economic downturn. The company has a strong order backlog of diverse projects that have what management called "very strong pricing power" to reprice products and adjust for inflation. Club take: Even if the economy slows down, we like this industrial because its aerospace business should continue to grow as it still has not fully recovered from the pandemic. Honeywell's continued demand, robust order backlog and pricing power are all viewed as positives heading into 2023. 11. Humana Analyst take: Humana's (HUM) "improved competitive positioning" in Medicare Advantage (MA) has helped spur membership growth for 2023, Goldman Sachs said. Analysts see an underappreciated opportunity in Humana's home care services and have a positive outlook on earnings in its primary care business. Those are key factors that can increase HUM's market share in health insurance services. Club take: Humana is a winner in Medicare Advantage. HUM stock has outperformed the broader market in 2022, a recognition that its business is not sensitive to the economy, higher interest rates, or the strong dollar. For those worried about the economy, Humana is a great stock to own. 12. Meta Platforms Analyst take: Goldman Sachs analysts see Reels — Meta Platforms' (META) answer to TikTok's short-form video dominance — gaining market share of user engagement in 2023. Moreover, Goldman notes Meta is "well-positioned to be a long-term secular winner" in the metaverse. Club take: While Meta was hit hard this year from slower ad spend and out of control expenses, we see potential upside for the beaten down stock if management further cuts expenses and as revenue headwinds ease. We're also encouraged that CEO Mark Zuckerberg is spending most of his time on core products. 13. Microsoft Analyst take: Microsoft (MSFT) is Citi's top large-cap pick in software under the expectation the tech giant can deliver double-digit percentage growth in calendar year 2023. Club take: Like our other Big Tech holdings, Microsoft has had a challenging year due to the slower global economy and the strong dollar, but the stock is less risky than its software peers with a reasonable valuation. 14. Nvidia Analyst take: Cowen named Nvidia (NVDA) the leader among computing players and the "key enabler" for artificial intelligence, a market that analysts label as underappreciated. "We plant the flag and say 'when' is 'now' to own Nvidia as our Best Idea in 2023," the note said. Analysts expect to see strong data center growth next year, a business they said could reach $20 billion by 2023. Club take: We've reduced our exposure to the semiconductor industry, which has been very volatile this year. While there could be more of that in the near term as Nvidia works through its gaming chip inventory glut, there are long-term secular growth opportunities for semiconductors in many areas, including cloud computing and AI, autonomous vehicles, industrial automation and sustainable energy. 15. Procter & Gamble Analyst take: Bank of America named Procter & Gamble (PG) as one of its top consumer staples stocks in 2023 for its defensive qualities in a slower economic environment. Analysts find its premium valuation is justified given the company's ability to increase market share gains while growing its top and bottom lines. Club take: P & G is one of our top recession-resilient consumer stocks. The defensive name has seen a recent uptick in stock price. Expect more growth next year, not just on sales but also on margins as headwinds related to higher input costs and the stronger dollar flip to tailwinds. 16. Qualcomm Analyst take: Qualcomm (QCOM) is a preferred name for 2023 at Deutsche Bank. Analysts say the consumer PC and handset markets that were first to fall could be the first to recover. This indicates Qualcomm may be first to bottom — and rebound. Club take: We are cautious on QCOM because it has a large exposure to China, the largest market for Androids, which has been impacted by Covid lockdowns. At the same time, the company continues to diversify its revenue base, including robust auto backlog growth. The stock's valuation is just 11 times forward earnings estimates. 17. Starbucks Analyst take: William Blair said Starbucks (SBUX) , a brand that ranks No. 1 in market share for coffee, is poised to deliver earnings and sales growth in 2023, thanks to the company's uninterrupted top-line momentum. During a period of economic uncertainty, Starbucks plans to open new stores across the U.S., which is anticipated to produce 40% revenue growth in the next three years, analysts said. Club take: We are bullish on Starbucks, partly because its store reinvention and expansion plans paint an exciting future for the coffee giant. China's economic reopening can be a catalyst for the stock. 18. Walt Disney Analyst take: JPMorgan said it likes Walt Disney (DIS) stock long term, seeing strong demand for its parks business despite a weaker economic backdrop. Club take: Like JPMorgan, we're long-term investors in Disney because of its valuable franchise. With former CEO Bob Iger back at the helm, we're anticipating his strategy for its Disney+ strategy next year, as streaming losses have been such a drag on the overall business. 19. Wells Fargo Analyst take: Raymond James says 2023 will be a volatile year for bank stocks, but that Wells Fargo (WFC) can withstand the pressure because it is levered to interest rates; if rates continue to rise, Wells Fargo's net interest income, a key revenue driver, should continue to grow, too. Club take: Wells Fargo has benefitted from higher rates in 2022 and that trend is expected to continue next year, a key part of our investment thesis. Also, Wells is a turnaround story and management still has opportunities to reduce its expense base and improve its efficiency ratio next year. This month's big settlement with the government over past account scandals could be a final step toward putting the bank's legal troubles behind it. 20. Wynn Resorts Analyst take: JPMorgan sees continued upside for gaming company Wynn Resorts (WYNN) , which has has seen its Macau operations hit by China's Covid lockdowns. Analysts believe travel in the region will improve in 2023, which would make Wynn a great China reopening play. Club take: We've been holding onto a small position in Wynn because we have long felt the reopening of Macao was a when-not-if situation. (Jim Cramer's Charitable Trust is long AAPL, AMZN, COST GOOGL, HON, HAL, NVDA, AMD, STZ, HUM, META, SBUX, WFC, WYNN, LLY, PG, MSFT, EL, DIS, QCOM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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