N68) Top 10 stocks to buy and hold for 2023

 Top 10 stocks to buy and hold for 2023

1: Greggs

What it does: Greggs is a popular UK-based food-on-the-go retailer. It sells a variety of fresh baked goods, sandwiches, and sweet treats.

By Harshil Patel: My top stock to buy for 2023 is Greggs (LSE: GRG). It offers both sought-after sausage rolls and an appealing business.  

In 2013, it started its transition from bakery to food-on-the-go. Since then, sales, profits, and margins have steadily gained.

Today, it’s a business that offers impressive cash flow generation, a solid brand, and a fully integrated supply chain.

2: Prudential

What it does: Prudential is a savings and insurance company that has a focus on the high-growth Asian and African markets. By Edward Sheldon, CFA. Prudential (LSE: PRU) underperformed the FTSE 100 index by a wide margin in 2022. This underperformance was largely the result of strict Covid restrictions in China, which had a significant impact on its revenues and earnings.

The outlook for 2023 looks more promising, however. Recently, China has begun to relax its Covid restrictions, and there is talk that we could see the border between Hong Kong and Mainland China open up soon. A reopening of this border would most likely give Prudential’s profits a big boost. In 2019, new business profit from its Chinese Mainland business contributed $694m to Hong Kong’s total new business profit, compared with close to zero in the first half of 2022.

3: The PRS REIT 

What it does: The PRS REIT is a real estate investment trust (REIT) with a portfolio of almost 5,000 residential rental homes.  

By Royston Wild. 2023 is shaping up to be another turbulent year for stock markets. The global economy is endangered by factors like surging interest rates and disappointing Chinese growth, putting corporate profitability under threat. 

In this environment, the scope for capital appreciation might be limited. Share prices could also slump if the economy tanks. One way to get around this and generate a positive return could be to buy dividend-paying shares. 

4: NatWest Group

What it does: NatWest is one of the UK’s main high-street banks. It provides banking services and loans to consumer and business clients.

By Roland Head. I think FTSE 100 bank stock NatWest Group (LSE: NWG) offers investors the opportunity to profit from strong earnings growth and a market-beating dividend yield.

Rising interest rates are providing a long-awaited boost to the bank’s profits. NatWest’s net interest income rose by £771m to £2,640m during the third quarter. This helped to increase underlying profits for the period by 76% to £1,333m.

One risk is that late payments on mortgages and other loans could rise next year if the UK economy continues to slow. NatWest set aside an extra £247m to cover possible future losses during the third quarter, but management says there’s no sign of any repayment problems yet.

5: Shell

What it does: Shell is a global group of energy and petrochemical companies with 82,000 employees and operations in more than 70 countries.

By Andrew Mackie: Energy stocks, particularly oil, and gas, have been the standout performers in 2022. Shell (LSE: SHEL)’s share price has risen 45%. However, despite record profits and gushing free cash flow, this has not translated into bumper shareholder payouts. A dividend yield of 3.5% hardly justifies its status on a star buy list. But its share price is cheap — dirt cheap.

Although 2023 is likely to be a year mired by stagflation, the underlying case for commodities remains as strong as ever.

Today, we have one of the most haphazard energy policies in history. The US is releasing its strategic petroleum reserves at a rate that is completely unsustainable. Central banks are aggressively raising interest rates to fight inflation. China, a net importer of oil, is still doing rolling lockdowns. These factors are all helping to keep a lid on energy demand.

6: Alpha Group International

What it does: Alpha Group is a fintech service provider enabling international businesses to manage their currency exchange risks.

By Zaven Boyrazian. Alpha Group (LSE: ALPH) is a currency risk management and alternative banking fintech group. The firm provides a host of services that enable enterprises to hedge against adverse movements in the foreign exchange markets to protect their bottom line while simultaneously processing and executing large international transactions instantly.

It’s quite a specialist field. And one that’s traditionally offered by corporate banking institutions. However, these are often too expensive for small- and medium-sized businesses to take advantage of. And that’s created quite a niche for Alpha to thrive in.

As per its latest interim results, revenue and pre-tax profits are growing at a rapid double-digit pace, fuelling the company’s international expansion into Australia. So much so that management now expects profits to be significantly ahead of its recently upgraded performance expectations for 2022.

7: S4 Capital

What it does: S4 Capital is a digital advertising agency network based in London that generates most of its revenue in the Americas.

By Christopher Ruane. I came into 2022 bullish on my holding in S4 Capital (LSE: SFOR). But things went south from the first week of January. The share price has collapsed 69% in 2022 as I write this. S4’s valuation reeled from results being delayed on multiple occasions. Costs rose faster than expected. Fast-growing costs remain a risk to margins. An advertising slowdown could hurt 2023 revenues.

Investors remain wary of the group headed by former WPP visionary Sir Martin Sorrell after its annus horribilis. Sir Martin has not bought any shares since January, despite them being available now for around a third of what he paid then.

8: Ashtead Group

What it does: Ashtead Group is a construction and industrial equipment rental company operating in the UK and North America.  

By Ben McPoland. My stock to buy for 2023 is Ashtead (LSE: AHT). This company has been relentless in hoovering up smaller competition over the last few years. In fact, it has spent over $2bn on dozens of bolt-on acquisitions since 2020.

This has helped deliver solid growth and growing profits. In fact, the company raised its full-year guidance earlier this month.

Yet the equipment rental market remains an extremely fragmented one, particularly in the US. The leading firm there only commands a 16% market share, with Ashtead not far behind (with 12%). That leaves ample room for further consolidation in the coming years.

However, there are very real risks relating to a US recession. Nobody knows how long or severe such an economic downturn might be.

9: JD Sports Fashion

What it does: JD Sports Fashion is a retailer of sports fashion and outdoor footwear/apparel, including brands such as Nike, Adidas, and The North Face.

By Paul Summers: Let’s be real: 2022 has been a shocker. There’s a possibility that 2023 won’t be all that great either. Still, these are the periods to go hunting for quality stocks that have been ‘thrown out with the bathwater’.

An investment in JD Sports Fashion (LSE: JD) is clearly contrarian. A new pair of trainers isn’t a priority compared to heating or food. Having lost more than 40% in value this year at the time of writing, however, I suspect a lot of negativity is priced in. 

10: Barratt Developments

What it does: Barratt Developments builds houses across the UK.

By Alan Oscroft. From an investment perspective, I love a good recession. It depresses so many share prices and can provide some cheap long-term buys.

I also like a cyclical sector when it’s down. It can then be a great time to buy and lock in healthy long-term dividend yields.

Put the two together, and we have the housebuilding sector. It’s taken a hammering in 2022, with Barratt Developments (LSE: BDEV) losing close to half its value.

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