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These 4 Stocks Should Be Your Top Picks for 2023

While inflation expectation retreated to its lowest level last month, the Fed will likely stick to its aggressive monetary policy this year. Therefore, investors could consider buying fundamentally strong stocks Albertsons Companies (ACI), Celestica (CLS), Genie Energy (GNE), and DHI Group (DHX) for their 2023 portfolio. Keep reading...

The Conference Board reported that its consumer confidence index rose to 108.3 in December, up from 101.4 in November. The inflation expectations retreated to their lowest level since September of last year. While the Fed might slow the rate hike pace, rate increases are expected to continue and remain high at least this year.

As per the CME FedWatch Tool, two-thirds of traders expect the federal funds rate to be at or lower than its current level of around 4.5% by the end of 2023. However, BlackRock’s bond chief Rick Rieder said that markets shouldn’t expect the central bank to start slashing rates until 2024.

In addition, some Fed officials believe the central bank needs to remain aggressive in raising interest rates to control inflation. Fed Governor Michelle Bowman recently said that the bank would have to raise interest rates further to combat high inflation.

While the market is expected to remain under pressure, rock-solid stocks Albertsons Companies, Inc. (ACI), Celestica Inc. (CLS), Genie Energy Ltd. (GNE), and DHI Group, Inc. (DHX) could be top additions to your 2023 portfolio.

Albertsons Companies, Inc. (ACI)

ACI is engaged in the operation of food and drug stores in the United States. It offers grocery, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services.

On October 14, 2022, ACI and Kroger Co. (KR) announced a definitive merger agreement to establish a national footprint and unite around Kroger’s Purpose to Feed the Human Spirit.

The companies intend to invest $1 billion to continue raising associate wages and benefits and enhance customer experience. On top of it, ACI will pay a special cash dividend of up to $4 billion to its shareholders.

On January 10, ACI declared a cash dividend for the fourth quarter of fiscal 2022 of $0.12 per share of common stock, payable on February 10, 2023. Its annual dividend of $0.48 yields 2.29% on the current price. It has a four-year average dividend yield of 4.39%.

ACI’s net sales and other revenue increased 8.5% year-over-year to $18.15 billion in the fiscal third quarter ended December 3, 2022. Its gross margin grew 6% from the year-ago value to $5.12 billion.

The company’s adjusted net income came in at $505.10 million, representing an increase of 10.5% year-over-year, while its adjusted net income per Class A share rose 10.1% year-over-year to $0.87.

ACI’s revenue is expected to increase 7.9% year-over-year to $77.59 billion in the current fiscal year ending February 2023. Its EPS is expected to increase by 7% from its prior year to $3.29. It has surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.

The stock has gained 13% over the past three months to close the last trading session at $21.30.

ACI’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an A grade for Value and a B for Quality and Sentiment. In the A-rated Grocery/Big Box Retailers industry, it is ranked #5 out of 39 stocks.

In addition to the POWR Rating grades I have highlighted, you can check the other ratings of ACI for Growth, Momentum, and Stability here.

Celestica Inc. (CLS)

CLS operates as a hardware platform and supply chain solutions provider. It operates through two segments: Advanced Technology Solutions and Connectivity & Cloud Solutions. The company is headquartered in Toronto, Canada.

On October 18, CLS launched the DS1000 high-performance Gigabit Ethernet Layer 3 switch. This should benefit the company through its contribution to the OCP Enterprise Connectivity Solutions (ECS) group.

During the fiscal third quarter that ended September 30, CLS’ IFRS revenue increased 31.1% year-over-year to $1.92 billion. Non-IFRS adjusted net earnings came in at $63.60 million, while its non-IFRS adjusted earnings per share stood at $0.52, up 46.5% and 48.6% from the prior-year period, respectively.

The consensus EPS estimate of $0.54 for the fourth quarter that ended December 2022 indicates a 21.9% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $1.96 billion reflects an improvement of 29.7% from the prior year’s quarter. CLS topped consensus EPS and revenue estimates in each of the trailing four quarters.

Shares of CLS have gained 38.1% over the past three months to close its last trading session at $12.06. It has gained 23.3% over the past six months.

This promising prospect is reflected in CLS’ POWR Ratings. The stock’s overall A rating translates to a Strong Buy in our proprietary rating system.

CLS has an A grade for Growth and a B for Value, Momentum, and Sentiment. It is ranked first out of the 79 stocks in the Technology – Services industry.

Click here to see CLS’ additional grades for Stability and Quality.

Genie Energy Ltd. (GNE)

GNE and its subsidiaries supply electricity and natural gas to residential and small business customers internationally. It has three operational segments: Genie Retail Energy (GRE), GRE International, and Genie Renewables.

On December 6, 2022, GNE’s Genie Solar subsidiary received notice to proceed with constructing its first company-owned community solar generation project. Given the environmental benefit and the economics driving community solar development, GNE looks forward to expanding to additional sites in the coming months.

On November 30, 2022, the company acquired a portfolio of residential and small commercial customer contracts from Mega Energy. This acquisition is backed by its strong cash flows and should enable GNE to expand its footprint across retail supply markets.

GNE’s four-year average dividend yield is 2.95%, and its current dividend of $0.30 translates to a 2.75% yield.

For the fiscal third quarter that ended September 30, 2022, GNE’s gross profit increased 24.7% year-over-year to $43.14 million. The company’s income from operations rose 34.8% year-over-year to $23.54 million, while its adjusted EBITDA increased 35.3% from the year-ago value to $24.50 million.

Also, its net income attributable to common stockholders came in at $18.31 million compared to a net loss of $2.66 million in the prior year period. In addition, its EPS stood at $0.70 compared to a net loss per share of $0.10 in the same quarter last year.

The stock has gained 109.8% over the past year to close the last trading session at $10.91. It has gained 66% over the past nine months.

GNE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

It has an A grade for Value and a B for Growth and Momentum. Within the Utilities – Domestic industry, it is ranked first out of 66 stocks.

To see GNE’s rating for Stability, Sentiment, and Quality, click here.

DHI Group, Inc. (DHX)

DHX provides data, insights, and employment connections through specialized services for technology professionals globally. The company operates Dice, ClearanceJobs, and eFinancialCareers.

DHX’s revenues came in at $38.53 million for the third quarter that ended September 30, 2022, representing a 25.3% year-over-year growth. Its operating income came in at $1.22 million compared to an operating loss of $2.22 million in the prior-year quarter. Also, its adjusted EPS for the quarter stood at $0.02 versus a loss per share of $0.01 in the year-ago quarter.

Street expects DHX’s revenue for the fiscal year ending December 2022 to be $148.83 million, indicating a 24.1% year-over-year growth. The company’s EPS for the same year is expected to increase 133.4% from the prior year to $0.05. 

Also, the company has surpassed its consensus revenue estimates in all trailing four quarters and its EPS estimates in three of the trailing four quarters.

DHX has gained 5.1% over the past month to close its last trading session at $5.54.

It is no surprise that DHX has an overall B rating, which translates to Buy in our POWR Ratings system.

The stock has a B grade for Value, Sentiment, and Quality. It is ranked #2 of 21 stocks in the A-rated Outsourcing – Staffing Services industry.

Beyond what we’ve stated above, we have also given DHX grades for Growth, Momentum, and Stability. Get all DHX ratings here.

ACI shares were trading at $21.30 per share on Wednesday morning, down $0.00 (0.00%). Year-to-date, ACI has gained 2.70%, versus a 2.56% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.


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