Here are our top 5 stocks for 2023. Surprise: Only 2 are in the Magnificent Seven
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It was a big rebound year for stocks. The S & P 500 gained 24%, while the Dow rose 14% and the tech-heavy Nasdaq rose more than 43%. All three major averages were coming off big losses in 2022. Our portfolio of 33 stocks also bounced back. Throughout the year, we held onto our conviction and tuned out unwarranted noise and speculation. For example, our “own it, don’t trade it” thesis on Apple shares served us well despite a $200 billion two-day sell-off back in September on reports of a potential iPhone ban in China. The stock is up 55% for the year. And while the Magnificent Seven ( Alphabet , Amazon , Apple , Meta Platforms , Microsoft , Nvidia , Tesla ) led this year’s rally — we own all except Tesla — the Club also looked to put cash to work in other areas of the market. We added names like Broadcom , Eaton and DuPont to the portfolio. We also exited some positions, including Oracle, Emerson Electric and Johnson & Johnson . From the last trading session of 2022 to Thursday’s close, these were the five top-performing holdings in the portfolio. Each name notched a return in the triple digits, and all look promising heading into 2024. 1. Nvidia Not surprisingly, perhaps, Nvidia comes in at No. 1, rising 238.9% since the start of 2023. It is also the best performer in the S & P 500 index. The chipmaker was a major beneficiary of the generative AI frenzy this year, which lifted many tech stocks. Still, Jim Cramer thinks Nvidia is too cheap despite its monster gains, adding that the company “could have years of hyper growth ahead of it.” Consider: Nvidia shares currently trade at around 25 times forward earnings, far less than the 34 times at the end of 2022 — a reflection of an overly pessimistic outlook for the leading AI chipmaker. But we see more upside. “I think the stock is mispriced,” Jim said recently. “I continue to want to own Nvidia, not trade it.” NVDA YTD mountain Nvidia (NVDA) year-to-date performance 2. Meta Platforms Meta Platforms jumped 197.8%, a performance few saw coming after a disastrous 2022 when shares fell 64%. CEO Mark Zuckerberg announced in February that 2023 would be social media giant’s “year-of-efficiency, ” which included cutting over 20,000 jobs, in an effort to return to growth. The move seems to have worked. The AI arms race also helped, as investors looked for ways to play the emerging trend. Meta used AI to increase engagement and further monetize offerings such as Reels. This is the stock’s best annual performance ever, surpassing the 105% gain back in 2013. META YTD mountain Meta Platforms (META) year-to-date performance 3. Palo Alto Networks Palo Alto Networks stock increased 111.8% in 2023. The company is the dominant player in the cybersecurity industry, with less cyclical revenue streams and a more robust customer base. This is because the company offers an all-encompassing platform that provides security solutions against various attack vectors. Or, as Jim has described it, the firm is the “only real soup-to-nuts cyber play.” Palo Alto became the first in the industry to reach $100 billion in market cap earlier this month. Still, we think the stock has more room to run in 2024 because of the strong demand for all things cybersecurity. PANW YTD mountain Palo Alto Networks (PANW) year-to-date performance 4. Broadcom Broadcom shares soared 100.7%, and like many chipmakers got a boost from the AI demand. In addition to the strong AI networking opportunity that the company is already benefiting from financially, the team closed its acquisition of VMware, which should help grow recurring revenues and expand profit margins. Another catalyst: The legacy (non-AI) semiconductor business appears to be bottoming out and set to rebound in the coming year. AVGO YTD mountain Broadcom (AVGO) year-to-date performance 5) Salesforce Salesforce rounded out the Top 5 with a 100.3% in 2023. The enterprise software company found the right balance between improving margins and growing sales —with some help from a group of highly regarded activist investors early on the transformation. We predict shares of CRM have more room to run on an improving deal environment, with CEO Mark Benioff saying he sees more “green shoots” in the future during a November quarterly earnings call. CRM YTD mountain Salesforce (CRM) year-to-date performance (Jim Cramer’s Charitable Trust is long NVDA, META, CRM, AVGO, PANW. 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. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Dec. 7, 2018.
Michael Nagle | Bloomberg | Getty Images
It was a big rebound year for stocks. The S&P 500 gained 24%, while the Dow rose 14% and the tech-heavy Nasdaq rose more than 43%. All three major averages were coming off big losses in 2022.
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