Evercore ISI's top picks for 2023 include a tech comeback story and a car racing play

Published Thu, Jan 12 202312:07 AM EST

Finding opportunities amid the market volatility is "mission critical," and there are several to be had this year, according to Evercore ISI. The Wall Street firm is predicting an economic and earnings recession, catalyzing a "cathartic" volatility spike in 2023. Then, the bear market will find the bottom midyear, with S & P 500 ending the year higher at 4,150, Evercore's analysts wrote in their 2023 outlook, released Tuesday. "Alpha opportunities are surfacing in 2022's wreckage from inflation's breakout resulting in record tightening, catalyzing a stock/bond correlated decline. Value over Growth is key to US equity market performance, as positioning among sectors that have tended to outperform in stagflationary periods," the report said. With that in mind, Evercore came up with its top stock picks for 2023. Here are 15 of those names. Several tech names made the list, including Netflix . The streaming company should enjoy a comeback this year, after losing 51% in 2022, according to analyst Mark Mahaney. Netflix remains the streaming leader in terms of revenue, subscribers and content quality, according to Mahaney. Revenue opportunities will come from its ad-supported model and a crackdown on password sharing that will drive a material reacceleration in sales growth, he said. "This advertising business is the real deal," Mahaney said on CNBC's " Power Lunch " in December. "It's a major catalyst. It addresses rising price sensitivity at the company and they can do it in a way that is really positive for unit economics." Another tech giant, Apple , also made the cut. Its shares shed nearly 27% in 2022, but 2023 is its "moonshot" year, analyst Amit Daryanani said. "We see AAPL ramping up various moonshot projects that start to become material — be that AR/VR deployments (H1:23?), advertising business becomes more material and AAPL Pay starts to gain further scale," he wrote. Apple will unveil its highly anticipated mixed reality headset this spring and shipments will begin in the fall, according to a recent Bloomberg report . Also, China supply chain headwinds should be transitory, therefore investors should remain focused on the long-term opportunity, Daryanani said. He sees gross margin expansions, buybacks and new products driving earnings-per-share upside. In the media space, Liberty Media's Formula One Group is among the names that come out on top thanks to the growing popularity of car racing and repricing of broadcast and sponsorship deals, said analyst Vijay Jayant. "Formula 1 is in the sweet spot of a multi-year growth story," he wrote. There is also room for Formula One to outperform if the self-promoted Las Vegas race and/or sponsorship exceed expectations, he added. Meanwhile, energy stocks were the bright spot last year and should continue doing well. Several names made Evercore's list, including Exxon Mobil . The firm likes its diversified portfolio, which provides leverage to the commodity cycle. "This coupled with 'self-help' cost reductions, asset divestitures, leverage to global gas, and an influx of higher value barrels as major projects come onstream, margin expansion is expected through 2027," analyst Stephen Richardson said. Exxon Mobil surged 80% last year. Lastly, BioMarin Pharmaceutical is among the health-care names Evercore ISI expects to outperform this year. The company is entering what should be a clean growth phase with the launch of its gene treatment for hemophilia A, Roctavian, analyst Josh Schimmer said. BioMarin announced earlier this week that it signed an outcomes-based agreement with one of Germany's largest health insurers. The biotech has the potential to deliver more than $1 billion a year in free cash flow in the second half of the decade, while continuing to invest in innovation, Schimmer said. The stock, which hit a 52-week high on Wednesday, gained 17% in 2020. — CNBC's Michael Bloom contributed reporting.