2 More Growth Stocks for 2023
Last week I wrote about two of my higher conviction picks for 2023: Taiwan Semiconductor Manufacturing Company ($132.27|-4.86%) and Amazon ($179.22|-1.14%). Given that stocks have started off the year the same way they left off in 2022, it stands to reason that there are plenty of growth stocks trading near the bottom of their charts.
Why do we like growth stocks? They can provide some tantalizing outsized growth compared to blue-chip stocks. Of course, as we also learned in 2022, they tend to fall harder when times get tough for the markets. But if we are taking a long-term look at investing, and when I write this is what I tend to do, we should look for favourable discounts on some underperforming names. This week, I bring you two more growth stocks that I have my eye on for 2023.
Meta Platforms ($501.8|1.54%)
Every time I write about Meta Platforms I can hear the collective groan from investors. I get it! You guys don’t like Facebook and you don’t like Mark Zuckerberg. But do you like large amounts of free cash flow and a stock that is trading for historically cheap multiples? Meta had a rough year in 2022 when companies cut their ad spending to save on costs. Advertising makes up about 98% of Meta’s revenues so it’s easy to see why the stock suffered. But if you don’t think these headwinds are temporary, I’m not sure what else to say. No apps on Earth get more hits, views, or visits than Facebook or Instagram. Combined with Whatsapp and Meta gets nearly 4 billion, monthly active users. That’s a lot of eyeballs on ads. The Metaverse spending is something that many Meta bears point to but understand that the company can very much afford these investments. As I’ve said before, if Zuckerberg is right about the Metaverse then the company is about to head into orbit. If he’s not, they move on and still rake in hundreds of billions of dollars in ad revenue. At these price levels, Meta is a no-brainer.
NVIDIA (NASDAQ: NVDA)
It’s been a difficult year for chip stocks which means they are trading at cheap multiples right now. This was part of my reasoning behind recommending Taiwan Semiconductor Manufacturing last week, and it’s part of my reasoning behind recommending NVIDIA as a stock to watch. We all know the vast range of industries that NVIDIA is involved in. From data centers to gaming to crypto mining to electric vehicles, NVIDIA is more of a tech conglomerate than a chip company. Despite the recent bad press that the chip industry has received, NVIDIA continues to build strong partnerships. It just announced a new partnership with Foxconn to build autonomous vehicle software and has received rave reviews from analysts about its cloud gaming platform. It’s still not a cheap stock by traditional metrics as it trades 33 times future earnings, but if you have followed the stock, you’ll know this is as cheap as it has been in recent years. There are few companies in the world with more future potential than NVIDIA and I will gladly take that kind of upside in my portfolio.
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