Dear Financial Voice Reader,
So it’s that time of year when everyone is thinking about 2023 and of course, I hope, their stock portfolios in their pensions and SIPPs. So I got my team to give me the views of some of the big publications to see what they say. Here is a summary.
Over 1,000 companies with market capitalizations between $300 million and $2 billion were screened for stock returns, sales growth, return on equity, and earnings growth to rank the 100 best of last year.
For a company to qualify for the list, it needed to have positive sales growth during the last 12 months. The last year has seen only half of the stocks increase.
The top company on the list is SIGA Technologies, which produces antiviral treatments for diseases like monkeypox. Its share price has declined 63% since August's peak. The next company is Vaalco EnergyEGY, an oil drilling company based in Houston that operates primarily in Gabon, a small country in West Africa. The rising energy prices this year have benefited Vaalco and it has ramped up its production capacity from about 5,000 barrels per day to 20,000 barrels per day in the last 18 months, partly as a result of its $307 million acquisition of TransGlobe, a Canadian oil company.
According to BlackRock Investment Institute strategists, the healthcare sector is less sensitive to economic fluctuations than other sectors. Its performance exceeds the broader index's performance year-to-date by about 1.7%.
In the first quarter of next year, JPMorgan analysts predict a "mild recession" and the S&P 500 will test its 2022 lows. Compared with other developed markets, U.S. stocks are unattractive due to their high valuations and Fed hawkishness, the bank said.
The BoFA Global Research forecasts U.S. equities to end broadly flat in 2023, but gold prices are expected to rise up to 20% as the dollar falls. A decline in the greenback makes raw materials like gold more attractive to foreign buyers.
According to Bank of America, stocks are on track for a great bull market in 2023, but not in the place most investors anticipate. Next year and beyond, small-cap stocks are expected to lead the market higher rather than large-cap behemoths.
Because of a combination of factors, the stock market has historically favored smaller, localized companies. Banking of America's Michael Hartnett said that secular trends of stagflation, reshoring, localization, fiscal stimuli will equal a bull market for small cap stocks in 2023.
It is currently anticipated that a recession in 2023 will occur, according to Gargi Chaudhuri, iShares investment strategist for the Americas at BlackRock. In a regime of higher interest rates, investors might want to buy small-cap stocks instead of growth stocks in case the Fed "engineers a soft landing" for the U.S. economy.
In her recommendation, she mentioned the iShares Core S&P Small-Cap ETF IJR, -0.42%. FactSet data shows that the ETF is down 11.1% so far this year. According to Chaudhuri, the S&P 500 index, which is heavily oriented toward technology companies, dropped 14.4% over the same period.
Well, that’s the first batch. We will look into more next week. And if you’d like my views – www.campaignforamillion.com to get them including my weekly market update.
