Company / Analytics

Analytics, 21 April 2023

Best Stocks To Consider In April 2023

In 2022, inflation was the big headline in the economic story, with the Consumer Price Index (CPI) reaching as high as 9.06%. As a response, the Federal Reserve raised the federal funds rate seven times, totaling a 4.25% increase.

Choosing the right stocks for 2023 is challenging amid this uncertainty. It is advisable to opt for mature, stable companies with established growth potential rather than smaller, more agile investments with higher growth capacity. Established companies can experience growth due to a renewed focus on efficiency, pricing power, favorable trends, product launches, or some combination thereof. This article discusses the top five stocks to buy for 2023, including Amazon, Shopify, Eli Lilly, Walt Disney, and Etsy.

Amazon Stocks – current share price and forecast

Amazon faced significant challenges in 2022. The company’s e-commerce business lost approximately $8 billion globally in the first three quarters of the year, while the growth of its high-margin AWS segment slowed in Q3, missing analysts’ expectations. Furthermore, Amazon announced plans to lay off up to 20,000 employees across various departments, including distribution centers, IT, and executives.

Since the beginning of the year, Amazon’s stock price has plummeted by 50%. However, these difficult times could set Amazon up for a better 2023. The company will have an easier time comparing its profits to those of 2022, and CEO Andy Jassy is determined to streamline the company’s cost structure. Amazon’s cost-cutting efforts should result in strategic changes in unprofitable areas, such as international and devices segments, as well as ongoing activities like package delivery.

Amazon has also repurchased billions of dollars’ worth of common stock in 2022, marking the first time it has done so since 2012. The company still has $6 billion left on its share repurchase authorization, and continued share buybacks should support higher earnings per share in the future.

Moreover, Amazon’s current stock price is relatively inexpensive compared to its history. The consensus price target for Amazon is around $140, whereas the current stock price is below $110.

Shopify Stocks – current share price and forecast

Shopify is a platform that empowers businesses of all sizes to sell their products online, with a focus on smaller businesses and establishing long-term relationships. They offer a subscription plan starting at $39 per month and provide additional services such as payment processing solutions and logistics to help businesses operate smoothly.

Through its “one-stop shop” approach to e-commerce, Shopify has become a powerhouse, with only Amazon processing more e-commerce sales. However, the company still has a massive growth opportunity, with only $5.6 billion in revenue generated over the past four quarters compared to its estimated $153 billion market opportunity.

E-commerce is still in the early stages, accounting for less than 15% of retail sales in the US. Shopify holds the second-largest market share and has network effect advantages over competitors. Despite recession fears and signs of consumer spending slowing down, Shopify’s shares are down, making it a clear choice for the best stocks to buy in 2023. The current price of Shopify shares is $48.42.

Eli Lilly Stocks – current share price and forecast

Eli Lilly is a global pharmaceutical company that specializes in developing treatments for a range of diseases including diabetes, obesity, Alzheimer’s, immune system disorders, certain cancers and Covid-19. Its products are distributed worldwide through wholesale distributors and marketing agreements with other pharmaceutical companies.

Despite a challenging market, Eli Lilly’s stock has risen by 31% in 2022. This can be attributed to the successful launch of several drugs, including Mounjaro for type 2 diabetes, Verzenio for breast cancer, Trulicity for diabetes, and Emgality for migraines. In the third quarter, the company’s revenue grew by 7% on a constant-currency basis, and earnings per share increased by 12% on a non-GAAP basis.

With a strong product pipeline, analysts predict that Eli Lilly’s growth momentum will continue. The company plans to launch four more products and a major indication for Mounjaro by the end of 2023. One promising product is Donanemab, a treatment for early-stage Alzheimer’s patients.

Eli Lilly’s EVP and CEO Anat Ashkenazi is confident that the company’s product portfolio can support “top-tier, volume-driven revenue growth” until 2030. For 2023, the company projects revenue of $30.3 to $30.8 billion and non-GAAP earnings per share of $8.10 to $8.30, both showing growth from expected year-end 2022 results.

Eli Lilly also pays a dividend with a yield of about 1%, and shareholders have enjoyed dividend increases for the past eight years. The company’s three-year annualized dividend growth is almost 15%. Currently, Eli Lilly’s share price is $384.67, which is above the consensus price target of about $378.

Walt Disney Company Stocks – current share price and forecast

Walt Disney is an entertainment company that operates in two segments. Disney Parks, Experiences and Products manages theme parks globally, while Disney Media and Entertainment Distribution operates TV networks, film studios, produces and distributes TV content and manages streaming services like Disney+, ESPN+, and Hulu. Additionally, Disney licenses its trade names and characters to third parties for merchandise and games.

Disney’s stock has decreased by roughly 45% since January 2022, due to a lack of cash flow from its struggling streaming business, which also failed to produce enough revenue to reduce its debt load. Dividends and share buybacks are currently not an option.

The company missed its earnings estimate for the September quarter by $0.20 and replaced CEO Bob Chapek, who made some unpopular decisions such as raising theme park prices and initially ignoring Florida’s “Don’t Say Gay” bill. His predecessor, Bob Iger, returned as CEO and is under a two-year contract. Iger was well-liked as CEO between 2005 and 2020.

Despite the challenges, there are positive developments at Disney. The company has witnessed impressive subscriber growth in its streaming business, adding 57 million subscribers in the last fiscal year, exceeding Netflix’s subscribers by 235 million. The company also recently launched Disney+ Basic, an ad-supported subscription offering with a lower price point.

Although the theme park business generated less revenue, it generated higher operating income than the media business, and revenue is rebounding post-Covid. Disney is expected to continue growing its streaming revenue while focusing on profitability. Chapek predicted Disney+ would become profitable in fiscal year 2024. Given his past success with Disney+, Iger is unlikely to miss this prediction.

Despite the low stock price, a resurgence in theme park revenues, a stronghold in streaming, and a respected CEO at the helm make Disney a good buying opportunity for 2023. The consensus price target for Disney is $124.05, while the stock currently trades at about $99.

Etsy Stocks – current share price and forecast

Etsy was already experiencing steady growth by connecting customers with unique handmade goods before the COVID-19 pandemic. However, the pandemic provided a significant boost to e-commerce, and Etsy’s growth skyrocketed at more than double the rate of overall e-commerce. While the demand for unique face masks during the pandemic certainly played a role in Etsy’s growth, the company’s impressive expansion has been consistent across all product categories and is ongoing. In the fourth quarter of 2022, Etsy’s marketplace sales volume increased by 144% compared to pre-pandemic levels.

Etsy’s success as a platform is noteworthy, especially as it competes with behemoths like Amazon. However, Etsy has not only survived but thrived against Amazon’s own handmade items platform. With its strong platform and brand, Etsy’s market opportunity is valued at hundreds of billions of dollars. Despite generating approximately $13 billion in sales in 2022, Etsy has only begun to tap into this vast potential. Additionally, the recent decline in growth stock prices presents an opportunity for long-term investors to consider investing in Etsy. The consensus price target for Etsy is $134.29, while the stock currently trades at $101.91

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