A 2023 marked by volatility for Wall Street. The anomalous dispersion of the forecasts of experts and economic institutions confirms a disturbing scenario. Which stocks to bet on?
On Wall Street the forecasts for 2023 are oriented towards prudence. The first months of the year will be critical for the US economy, which is already starting to creak under the weight of restrictive monetary policies. Despite the declines seen in 2022, market prices have not yet incorporated the increase in interest rates implemented by the Fed during the year to fight inflation: the reflection of monetary policy choices could be seen in the coming months.
Since the macroeconomic and geopolitical factors that characterized 2022 will continue to be protagonists also in 2023, fears of recession combined with persistent inflation point towards a contraction in corporate profits.
In formulating their forecasts for 2023, the analysts of the main investment banks have taken into account these three elements: interest rate hike, inflation and earnings revision corporate. Let’s see below the price projections of the Wall Street benchmark index, the S&P 500, and which are the shares to buy in 2023 according to the experts.
Wall Street 2023 forecast for the S&P 500
In the following table we have collected the 2023 forecasts for the S&P 500, formulated by the research offices of the main investment banks and hedge funds on a global scale.
| Forecast | Target at the end of 2023 | Change % |
|---|---|---|
| Barclays | 3,675 | -3.9% |
| General Company | 3,800 | -0.6% |
| UBS | 3,900 | +2% |
| Morgan Stanley | 3,900 | +2% |
| BlackRock | 3,930 | +2.8% |
| Goldman Sachs | 4,000 | +4.6% |
| BofA | 4,000 | +4.6% |
| Credit Suisse | 4.050 | +5.9% |
| RBC | 4,100 | +7.2% |
| .JPMorgan | 4,200 | +9.8% |
| Wells Fargo | 4,300 | +12.4% |
| Oppenheimer | 4,400 | +15.1% |
| Deutsche Bank | 4,500 | +17.7% |
| Leuthold Group (Paulsen) | 5,000 | +30.8% |
As the Kairos strategist Alessandro Fugnoli also underlined, the 2023 forecasts are characterized by a strong dispersion due to the complexity of the period we are going through and incorporate the tensions experienced during 2022. Tensions that will still bring volatility to Wall Street and global stock markets.
The S&P 500’s average forecast for 2023 is 4,009 according to a Bloomberg survey. A report from Reuters based on analyzes of 41 Wall Street strategists indicates an average price target for the S&P 500 of 4,200 points.
Wall Street stocks to buy in 2023
In a context such as the one just described, the experts agree that a correct asset allocation depends on a selection of companies with solid fundamentals and business models characterized by good margins or related to trends long-term, such as that of the energy transition and digitalisation.
Stocks that are unafraid of an economic slowdown and have excellent long-term growth prospects include General Electric, UPS, nVent Electric, Hexcel and PTC. Let’s see their characteristics below.
General Electric
General Electric, the historic US multinational active in the field of technology and services, lost about 20% on the New York Stock Exchange during 2022, recovering ground in December. These days the news of an organizational reorganization with the spin off of GE Healthcare which leaves the group made up of three new companies (GE Power, GE Aerospace and GE Renewable Energy) with a focus on renewable and hybrid energies.
The average analyst recommendation reported by MarketScreener is "buy" with an average target price of $93.63 (against the current $68.40).
UPS
UPS also lost around 20% during 2022 and could continue to suffer from a slowing macroeconomic environment. The delivery volumes of the multinational leader in the logistics sector are in fact linked to economic growth.
However, over the long term, the company is expected to meet its 2023 goals by increasing its focus on small and medium-sized businesses, e-commerce and high-growth international markets, while improving its profit margin.
nVENT
Excellent prospects also for nVENT, a company that produces electrical connection and protection solutions. According to estimates, earnings are expected to grow 18% in 2022 and 7% in 2023.
nVent’s technologically advanced solutions can drive electrification into the economy and create the power transmission and distribution structures and networks for electric vehicles, smart homes, and industrial automation.
The growth potential of nVENT is therefore very high.
PTC
PTC is a company specialized in the digitalization of production activities through augmented reality and creates software for product lifecycle management. According to data from Insider Monkey, 39 hedge funds were bullish on the stock at the end of the third quarter of 2022, up from 42 funds in the previous quarter. PTC may contract in the event of a productivity slowdown in the industrial sector, but the long-term outlook remains excellent and the digital revolution will continue well into the future.
Lockheed Martin
Lockheed Martin is among Wall Street’s best-performing stocks in 2022. With a 36% increase, the leading company in the defense industry is well positioned to increase earnings also in 2023 thanks to orders and supplies military to Ukraine and its allies. The prolongation of the conflict in Europe could generate an increase in cash flows in the coming years, confirming a solid remuneration for shareholders (currently 2.5%).
Original article published on Money.it Italy 2023-01-04 18:13:33. Original title: Wall Street previsioni 2023
