A new year of trading has begun, but many of the problems from 2022 have carried over into 2023. It’s still not clear when the Federal Reserve will pare back its tighter monetary policy, leading to worries about a potential U.S. recession. However, recent economic data shows signs that inflation may be easing. The Bureau of Labor Statistics said Friday that U.S. wages rose 0.3% month over month. That’s less than a Dow Jones expected gain of 0.4% and contributed to a sharp market rally. The S & P 500 jumped 2.3%, notching its biggest one-day gain since Nov. 30, when it popped 3.1%. Despite the uncertainty surrounding the market to start the new year, Wall Street analysts see several stocks they like going forward. CNBC Pro combed the top 2023 picks from nine research firms to find the most common stocks between them. One of those stocks is Amazon . The e-commerce giant is coming off a tough year, falling 49.6% for its biggest annual decline since 2000 — when it lost nearly 80% of its value. Still, JPMorgan, Loop Capital and Deutsche Bank all named it a top pick for 2023. “We like AMZN for the significant earnings leverage as the cost structure begins to normalize. If unit economics were to fully normalize by 2024, we estimate AMZN’s consolidated operating margin could reach double digit-percentage levels vs. the current consensus estimate of 4.9%,” wrote Loop Capital analyst Rob Sanderson. “Near-term headwinds for AWS have been weighing on the stock since the negative 3Q 2022 surprise but should ease over the next 1-2 quarters as belt-tightening by enterprise and Internet customers rolls through,” Sanderson added. AMZN 1Y mountain Amazon in past year Another top pick shared among several analysts is brokerage Charles Schwab . The stock fell 1% last year, but that easily outperformed the S & P 500’s 19.4% drop. Analysts at UBS, Deutsche Bank and JPMorgan named it a top pick. “We like Schwab going into 2023 because of the downside protection and multiple avenues of upside it offers,” wrote JPMorgan’s Kenneth Worthington. “Schwab offers downside protection with its countercyclical earnings stream and its lack of credit risk protecting it from the lending problems many banks saw in 2022. We see cash sorting slowing into 2023 as rates peak and stabilize. As Schwab builds out the monetization [of] its platform, there are new revenue opportunities—particularly its institutional share platform for third party funds.” Domino’s Pizza , meanwhile, was named a top pick at Bank of America and BTIG after a tough year. The stock lost 38.6% in 2022. Bank of America’s Sara Senatore said Domino’s was “dogged by challenges in staffing delivery drivers, which in turn slowed service speeds and limited the ability to meet delivery demand” throughout 2022. However, she expects the first quarter of 2023 to be a turning point for the pizza delivery giant, noting: “We expect the initiatives introduced in 2022 to improve delivery driver availability … to gain further traction in 2023, boosting comps for company operated and franchised stores and growing volumes for the supply chain business.” DPZ 1Y mountain DPZ 1-year chart Chipmakers Advanced Micro Devices and Qualcomm were also named top picks at several analyst firms. Semiconductor stocks were under pressure throughout 2022 as supply chain constraints continued to weigh on the sector and demand for PCs eased. AMD shares dropped 55% last year, and Qualcomm fell nearly 40%. This year could be different if analysts are correct. “Our cycle analyses indicate that we are likely almost through the worst/bottom part of the cycle and, if history is any guide, AMD stock is well positioned for a likely upward trend from here,” wrote UBS analyst Timothy Arcuri, who named AMD a top pick. As for Qualcomm, Ross Seymore of Deutsche Bank named it a top pick, noting: “While the near-term headwinds from a weak smartphone market and macro uncertainties have weighed on the stock, we believe the company has significantly de-risked the numbers for 1H23.” Elsewhere, Crocs was named a top pick by several firms, including Baird. Shares of the footwear maker dropped 15% in 2022, snapping a streak of five straight positive years. However, Baird analyst Jonathan Komp said the stock is an “underappreciated story,” noting: “We believe CROX can see multiple expansion from current levels (8.5X NTM EV/EBITDA) supported by healthy sales and margin performance and progress on reducing balance sheet leverage below 2X by mid-2023E (supporting share repurchases).” — CNBC’s Michael Bloom contributed reporting.
